Correlation Between Allegheny Technologies and Constellium
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Constellium 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 Constellium 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 Constellium Nv, you can compare the effects of market volatilities on Allegheny Technologies and Constellium 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 Constellium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Constellium.
Diversification Opportunities for Allegheny Technologies and Constellium
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allegheny and Constellium is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv 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 Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Constellium go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Constellium
Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to generate 1.15 times more return on investment than Constellium. However, Allegheny Technologies is 1.15 times more volatile than Constellium Nv. It trades about 0.16 of its potential returns per unit of risk. Constellium Nv is currently generating about 0.14 per unit of risk. If you would invest 4,174 in Allegheny Technologies Incorporated on January 17, 2024 and sell it today you would earn a total of 935.00 from holding Allegheny Technologies Incorporated or generate 22.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. Constellium Nv
Performance |
| Timeline |
| Allegheny Technologies |
| Constellium Nv |
Allegheny Technologies and Constellium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Constellium
The main advantage of trading using opposite Allegheny Technologies and Constellium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Constellium 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 Constellium will offset losses from the drop in Constellium's long position.| Allegheny Technologies vs. Northwest Pipe | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Gulf Island Fabrication |
| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Alumina Limited PK |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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