Correlation Between Worthington Industries and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Worthington Industries 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 Worthington Industries and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worthington Industries and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Worthington Industries 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 Worthington Industries with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worthington Industries and Allegheny Technologies.
Diversification Opportunities for Worthington Industries and Allegheny Technologies
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Worthington and Allegheny is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Industries and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Worthington Industries 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 Worthington Industries 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 Worthington Industries i.e., Worthington Industries and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Worthington Industries and Allegheny Technologies
Considering the 90-day investment horizon Worthington Industries is expected to generate 1.87 times more return on investment than Allegheny Technologies. However, Worthington Industries is 1.87 times more volatile than Allegheny Technologies Incorporated. It trades about 0.11 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about -0.03 per unit of risk. If you would invest 3,834 in Worthington Industries on October 20, 2024 and sell it today you would earn a total of 367.00 from holding Worthington Industries or generate 9.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worthington Industries vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Worthington Industries |
| Allegheny Technologies |
Worthington Industries and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worthington Industries and Allegheny Technologies
The main advantage of trading using opposite Worthington Industries and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worthington Industries 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.| Worthington Industries vs. Allegheny Technologies Incorporated | Worthington Industries vs. ESAB Corp | Worthington Industries vs. Insteel Industries | Worthington Industries vs. Mayville Engineering Co |
| Allegheny Technologies vs. Worthington Industries | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. Northwest Pipe |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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