Correlation Between Allegheny Technologies and Tredegar

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

Diversification Opportunities for Allegheny Technologies and Tredegar

-0.41

Correlation Coefficient

Allegheny Technologies  Tredegar

Very good diversification

The 3 months correlation between Allegheny and Tredegar is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Tredegar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tredegar 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 Tredegar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tredegar has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Tredegar go up and down completely randomly.

Pair Corralation between Allegheny Technologies and Tredegar

Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to under-perform the Tredegar. But the stock apears to be less risky and, when comparing its historical volatility, Allegheny Technologies Incorporated is 1.13 times less risky than Tredegar. The stock trades about -0.01 of its potential returns per unit of risk. The Tredegar is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest  698.00  in Tredegar on September 17, 2024 and sell it today you would earn a total of  103.00  from holding Tredegar or generate 14.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Allegheny Technologies Incorpo  vs.  Tredegar

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 latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Tredegar

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tredegar are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Tredegar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allegheny Technologies and Tredegar

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

The idea behind Allegheny Technologies Incorporated and Tredegar 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.