Correlation Between United States and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on United States 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 United States with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Allegheny Technologies.
Diversification Opportunities for United States and Allegheny Technologies
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Allegheny is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and United States 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 United States Steel 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 United States i.e., United States and Allegheny Technologies go up and down completely randomly.
Pair Corralation between United States and Allegheny Technologies
Taking into account the 90-day investment horizon United States is expected to generate 1.67 times less return on investment than Allegheny Technologies. In addition to that, United States is 1.36 times more volatile than Allegheny Technologies Incorporated. It trades about 0.05 of its total potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.11 per unit of volatility. If you would invest 5,682 in Allegheny Technologies Incorporated on August 30, 2024 and sell it today you would earn a total of 330.00 from holding Allegheny Technologies Incorporated or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| United States Steel |
| Allegheny Technologies |
United States and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Allegheny Technologies
The main advantage of trading using opposite United States and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
| Allegheny Technologies vs. Worthington Industries | Allegheny Technologies vs. Haynes International | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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