Correlation Between Allegheny Technologies and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Century Aluminum 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 Allegheny Technologies and Century Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and Century Aluminum, you can compare the effects of market volatilities on Allegheny Technologies and Century Aluminum 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 Allegheny Technologies with a short position of Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Century Aluminum.
Diversification Opportunities for Allegheny Technologies and Century Aluminum
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Allegheny and Century is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum and Allegheny Technologies 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 Allegheny Technologies Incorporated are associated (or correlated) with Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Century Aluminum go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Century Aluminum
Considering the 90-day investment horizon Allegheny Technologies is expected to generate 8.64 times less return on investment than Century Aluminum. But when comparing it to its historical volatility, Allegheny Technologies Incorporated is 2.08 times less risky than Century Aluminum. It trades about 0.13 of its potential returns per unit of risk. Century Aluminum is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 1,030 in Century Aluminum on December 29, 2023 and sell it today you would earn a total of 448.00 from holding Century Aluminum or generate 43.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Allegheny Technologies Incorpo vs. Century Aluminum
Performance |
Timeline |
Allegheny Technologies |
Century Aluminum |
Allegheny Technologies and Century Aluminum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allegheny Technologies and Century Aluminum
The main advantage of trading using opposite Allegheny Technologies and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Century Aluminum 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 Century Aluminum will offset losses from the drop in Century Aluminum's long position.Allegheny Technologies vs. Tredegar | Allegheny Technologies vs. CompoSecure | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Northwest Pipe |
Century Aluminum vs. Chemours Co | Century Aluminum vs. CF Industries Holdings | Century Aluminum vs. Dupont De Nemours | Century Aluminum vs. FutureFuel Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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