Correlation Between Southern Copper and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Southern Copper 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 Southern Copper and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Southern Copper 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 Southern Copper with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Allegheny Technologies.
Diversification Opportunities for Southern Copper and Allegheny Technologies
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and Allegheny is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Southern Copper 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 Southern Copper 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 Southern Copper i.e., Southern Copper and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Southern Copper and Allegheny Technologies
Given the investment horizon of 90 days Southern Copper is expected to generate 1.05 times more return on investment than Allegheny Technologies. However, Southern Copper is 1.05 times more volatile than Allegheny Technologies Incorporated. It trades about 0.28 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.12 per unit of risk. If you would invest 10,355 in Southern Copper on January 21, 2024 and sell it today you would earn a total of 988.00 from holding Southern Copper or generate 9.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Copper vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Southern Copper |
| Allegheny Technologies |
Southern Copper and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and Allegheny Technologies
The main advantage of trading using opposite Southern Copper and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper 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.| Southern Copper vs. Ero Copper Corp | Southern Copper vs. Hudbay Minerals | Southern Copper vs. Taseko Mines | Southern Copper vs. Amerigo Resources |
| Allegheny Technologies vs. Northwest Pipe | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Gulf Island Fabrication |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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