Correlation Between Weyco and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Weyco and Allegheny Technologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Weyco and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Weyco and Allegheny Technologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Weyco with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Allegheny Technologies.
Diversification Opportunities for Weyco and Allegheny Technologies
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weyco and Allegheny is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Weyco is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Weyco Group are associated (or correlated) with Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Weyco i.e., Weyco and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Weyco and Allegheny Technologies
Given the investment horizon of 90 days Weyco is expected to generate 1.0 times less return on investment than Allegheny Technologies. But when comparing it to its historical volatility, Weyco Group is 1.02 times less risky than Allegheny Technologies. It trades about 0.07 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,243 in Allegheny Technologies Incorporated on September 1, 2024 and sell it today you would earn a total of 1,774 from holding Allegheny Technologies Incorporated or generate 41.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Weyco Group |
| Allegheny Technologies |
Weyco and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Allegheny Technologies
The main advantage of trading using opposite Weyco and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, Allegheny Technologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.The idea behind Weyco Group and Allegheny Technologies Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. Northwest Pipe | Allegheny Technologies vs. Carpenter Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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