Correlation Between Allegheny Technologies and Gulf Island

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

By analyzing existing cross correlation between Allegheny Technologies Incorporated and Gulf Island Fabrication, you can compare the effects of market volatilities on Allegheny Technologies and Gulf Island 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 Allegheny Technologies with a short position of Gulf Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Gulf Island.

Diversification Opportunities for Allegheny Technologies and Gulf Island

-0.32

Correlation Coefficient

Allegheny Technologies  Gulf Island

Very good diversification

The 3 months correlation between Allegheny and Gulf is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Gulf Island Fabrication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Island Fabrication and Allegheny Technologies 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 Allegheny Technologies Incorporated are associated (or correlated) with Gulf Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Island Fabrication has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Gulf Island go up and down completely randomly.

Pair Corralation between Allegheny Technologies and Gulf Island

Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to under-perform the Gulf Island. But the stock apears to be less risky and, when comparing its historical volatility, Allegheny Technologies Incorporated is 1.41 times less risky than Gulf Island. The stock trades about -0.04 of its potential returns per unit of risk. The Gulf Island Fabrication is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  548.00  in Gulf Island Fabrication on October 25, 2024 and sell it today you would earn a total of  172.00  from holding Gulf Island Fabrication or generate 31.39% return on investment over 90 days.

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

Allegheny Technologies Incorpo  vs.  Gulf Island Fabrication

Allegheny Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegheny Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Allegheny Technologies is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Gulf Island Fabrication

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Island Fabrication are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Gulf Island demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allegheny Technologies and Gulf Island

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

The idea behind Allegheny Technologies Incorporated and Gulf Island Fabrication 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.