Correlation Between Allient and Carters
Can any of the company-specific risk be diversified away by investing in both Allient and Carters 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 Allient and Carters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allient and Carters, you can compare the effects of market volatilities on Allient and Carters 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 Allient with a short position of Carters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allient and Carters.
Diversification Opportunities for Allient and Carters
Excellent diversification
The 3 months correlation between Allient and Carters is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters and Allient 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 Allient are associated (or correlated) with Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of Allient i.e., Allient and Carters go up and down completely randomly.
Pair Corralation between Allient and Carters
Given the investment horizon of 90 days Allient is expected to generate 1.13 times more return on investment than Carters. However, Allient is 1.13 times more volatile than Carters. It trades about 0.08 of its potential returns per unit of risk. Carters is currently generating about -0.08 per unit of risk. If you would invest 2,065 in Allient on October 3, 2024 and sell it today you would earn a total of 363.00 from holding Allient or generate 17.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Allient vs. Carters
Performance |
Timeline |
Allient |
Carters |
Allient and Carters Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allient and Carters
The main advantage of trading using opposite Allient and Carters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient position performs unexpectedly, Carters 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 Carters will offset losses from the drop in Carters' long position.Allient vs. Summit Materials | Allient vs. Eldorado Gold Corp | Allient vs. BBB Foods | Allient vs. Highway Holdings Limited |
Carters vs. Childrens Place | Carters vs. Gildan Activewear | Carters vs. Oxford Industries | Carters vs. Columbia Sportswear |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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