Correlation Between Allient and 98385XAM8

Can any of the company-specific risk be diversified away by investing in both Allient and 98385XAM8 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 98385XAM8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allient and XTO ENERGY INC, you can compare the effects of market volatilities on Allient and 98385XAM8 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 98385XAM8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allient and 98385XAM8.

Diversification Opportunities for Allient and 98385XAM8

-0.7

Correlation Coefficient

Allient  98385XAM8

Excellent diversification

The 3 months correlation between Allient and 98385XAM8 is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Allient and XTO ENERGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTO ENERGY INC 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 98385XAM8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTO ENERGY INC has no effect on the direction of Allient i.e., Allient and 98385XAM8 go up and down completely randomly.

Pair Corralation between Allient and 98385XAM8

Given the investment horizon of 90 days Allient is expected to generate 2.19 times more return on investment than 98385XAM8. However, Allient is 2.19 times more volatile than XTO ENERGY INC. It trades about 0.2 of its potential returns per unit of risk. XTO ENERGY INC is currently generating about -0.01 per unit of risk. If you would invest  1,893  in Allient on October 11, 2024 and sell it today you would earn a total of  655.00  from holding Allient or generate 34.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	56.45%
Values	Daily Returns

Allient  vs.  XTO ENERGY INC

Allient

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 15 (%) 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.

XTO ENERGY INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XTO ENERGY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 98385XAM8 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allient and 98385XAM8

The main advantage of trading using opposite Allient and 98385XAM8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient position performs unexpectedly, 98385XAM8 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 98385XAM8 will offset losses from the drop in 98385XAM8's long position.

The idea behind Allient and XTO ENERGY INC 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.