Correlation Between Allegheny Technologies and Interactive Brokers

Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Interactive Brokers 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 Interactive Brokers 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 Interactive Brokers Group, you can compare the effects of market volatilities on Allegheny Technologies and Interactive Brokers 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 Interactive Brokers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Interactive Brokers.

Diversification Opportunities for Allegheny Technologies and Interactive Brokers

-0.59

Correlation Coefficient

Allegheny Technologies  Interactive Brokers

Excellent diversification

The 3 months correlation between Allegheny and Interactive is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Interactive Brokers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Brokers 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 Interactive Brokers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Brokers has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Interactive Brokers go up and down completely randomly.

Pair Corralation between Allegheny Technologies and Interactive Brokers

Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to under-perform the Interactive Brokers. In addition to that, Allegheny Technologies is 1.04 times more volatile than Interactive Brokers Group. It trades about -0.13 of its total potential returns per unit of risk. Interactive Brokers Group is currently generating about 0.2 per unit of volatility. If you would invest  13,918  in Interactive Brokers Group on September 30, 2024 and sell it today you would earn a total of  3,982  from holding Interactive Brokers Group or generate 28.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Allegheny Technologies Incorpo  vs.  Interactive Brokers Group

Allegheny Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegheny Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Interactive Brokers

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Brokers Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, Interactive Brokers reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allegheny Technologies and Interactive Brokers

The main advantage of trading using opposite Allegheny Technologies and Interactive Brokers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Interactive Brokers 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 Interactive Brokers will offset losses from the drop in Interactive Brokers' long position.

The idea behind Allegheny Technologies Incorporated and Interactive Brokers Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.