Correlation Between Allegheny Technologies and GMS
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and GMS 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 GMS 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 GMS Inc, you can compare the effects of market volatilities on Allegheny Technologies and GMS 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 GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and GMS.
Diversification Opportunities for Allegheny Technologies and GMS
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Allegheny and GMS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc 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 GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and GMS go up and down completely randomly.
Pair Corralation between Allegheny Technologies and GMS
Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to under-perform the GMS. In addition to that, Allegheny Technologies is 1.22 times more volatile than GMS Inc. It trades about -0.04 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.02 per unit of volatility. If you would invest 8,376 in GMS Inc on October 3, 2024 and sell it today you would earn a total of 107.00 from holding GMS Inc or generate 1.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Allegheny Technologies Incorpo vs. GMS Inc
Performance |
Timeline |
Allegheny Technologies |
GMS Inc |
Allegheny Technologies and GMS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allegheny Technologies and GMS
The main advantage of trading using opposite Allegheny Technologies and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, GMS 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 GMS will offset losses from the drop in GMS's long position.Allegheny Technologies vs. Worthington Industries | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. Northwest Pipe |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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