Correlation Between Dana and Allient

Can any of the company-specific risk be diversified away by investing in both Dana and Allient 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 Dana and Allient into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dana Inc and Allient, you can compare the effects of market volatilities on Dana and Allient 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 Dana with a short position of Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and Allient.

Diversification Opportunities for Dana and Allient

-0.43

Correlation Coefficient

Dana  Allient

Very good diversification

The 3 months correlation between Dana and Allient is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Dana 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 Dana Inc are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Dana i.e., Dana and Allient go up and down completely randomly.

Pair Corralation between Dana and Allient

Considering the 90-day investment horizon Dana is expected to generate 2.33 times less return on investment than Allient. In addition to that, Dana is 1.49 times more volatile than Allient. It trades about 0.04 of its total potential returns per unit of risk. Allient is currently generating about 0.14 per unit of volatility. If you would invest  2,065  in Allient on September 3, 2024 and sell it today you would earn a total of  532.00  from holding Allient or generate 25.76% return on investment over 90 days.

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

Dana Inc  vs.  Allient

Dana Inc

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dana may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Allient

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dana and Allient

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

The idea behind Dana Inc and Allient 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.