Correlation Between Yokohama Rubber and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Yokohama Rubber 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 Yokohama Rubber and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Yokohama Rubber and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Yokohama Rubber 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 Yokohama Rubber with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and Allegheny Technologies.
Diversification Opportunities for Yokohama Rubber and Allegheny Technologies
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yokohama and Allegheny is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Yokohama Rubber 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 The Yokohama Rubber 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 Yokohama Rubber i.e., Yokohama Rubber and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Yokohama Rubber and Allegheny Technologies
Assuming the 90 days trading horizon The Yokohama Rubber is expected to generate 0.74 times more return on investment than Allegheny Technologies. However, The Yokohama Rubber is 1.36 times less risky than Allegheny Technologies. It trades about 0.1 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about -0.01 per unit of risk. If you would invest 1,850 in The Yokohama Rubber on October 25, 2024 and sell it today you would earn a total of 170.00 from holding The Yokohama Rubber or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Yokohama Rubber vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Yokohama Rubber |
| Allegheny Technologies |
Yokohama Rubber and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yokohama Rubber and Allegheny Technologies
The main advantage of trading using opposite Yokohama Rubber and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokohama Rubber 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.| Yokohama Rubber vs. Allegheny Technologies Incorporated | Yokohama Rubber vs. Micron Technology | Yokohama Rubber vs. COMPUTERSHARE | Yokohama Rubber vs. BioNTech SE |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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