Correlation Between Albany International and Talon International

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

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

Diversification Opportunities for Albany International and Talon International

0.0

Correlation Coefficient

Albany International  Talon International

Pay attention - limited upside

The 3 months correlation between Albany and Talon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Albany International and Talon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talon International and Albany International 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 Albany International are associated (or correlated) with Talon International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talon International has no effect on the direction of Albany International i.e., Albany International and Talon International go up and down completely randomly.

Pair Corralation between Albany International and Talon International

Considering the 90-day investment horizon Albany International is expected to under-perform the Talon International. But the stock apears to be less risky and, when comparing its historical volatility, Albany International is 5.32 times less risky than Talon International. The stock trades about -0.02 of its potential returns per unit of risk. The Talon International is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Talon International on October 11, 2024 and sell it today you would earn a total of  4.00  from holding Talon International or generate 36.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.82%
Values	Daily Returns

Albany International  vs.  Talon International

Albany International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albany International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Albany International displayed solid returns over the last few months and may actually be approaching a breakup point.

Talon International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talon International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Talon International is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Albany International and Talon International

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

The idea behind Albany International and Talon International 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.