Correlation Between 031162DS6 and Allient

Can any of the company-specific risk be diversified away by investing in both 031162DS6 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 031162DS6 and Allient into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMGN 56 02 MAR 43 and Allient, you can compare the effects of market volatilities on 031162DS6 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 031162DS6 with a short position of Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of 031162DS6 and Allient.

Diversification Opportunities for 031162DS6 and Allient

-0.3

Correlation Coefficient

031162DS6  Allient

Very good diversification

The 3 months correlation between 031162DS6 and Allient is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding AMGN 56 02 MAR 43 and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and 031162DS6 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 AMGN 56 02 MAR 43 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 031162DS6 i.e., 031162DS6 and Allient go up and down completely randomly.

Pair Corralation between 031162DS6 and Allient

Assuming the 90 days trading horizon AMGN 56 02 MAR 43 is expected to under-perform the Allient. But the bond apears to be less risky and, when comparing its historical volatility, AMGN 56 02 MAR 43 is 3.13 times less risky than Allient. The bond trades about -0.17 of its potential returns per unit of risk. The Allient is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,041  in Allient on September 14, 2024 and sell it today you would earn a total of  565.50  from holding Allient or generate 27.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

AMGN 56 02 MAR 43  vs.  Allient

AMGN 56 02

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMGN 56 02 MAR 43 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for AMGN 56 02 MAR 43 investors.

Allient

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 031162DS6 and Allient

The main advantage of trading using opposite 031162DS6 and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 031162DS6 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 AMGN 56 02 MAR 43 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.