Correlation Between Marchex and Allient

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

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

Diversification Opportunities for Marchex and Allient

0.25

Correlation Coefficient

Marchex  Allient

Modest diversification

The 3 months correlation between Marchex and Allient is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Marchex 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 Marchex are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Marchex i.e., Marchex and Allient go up and down completely randomly.

Pair Corralation between Marchex and Allient

Given the investment horizon of 90 days Marchex is expected to generate 1.2 times less return on investment than Allient. In addition to that, Marchex is 1.45 times more volatile than Allient. It trades about 0.1 of its total potential returns per unit of risk. Allient is currently generating about 0.18 per unit of volatility. If you would invest  2,041  in Allient on September 14, 2024 and sell it today you would earn a total of  652.00  from holding Allient or generate 31.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Marchex  vs.  Allient

Marchex

Risk-Adjusted Performance

8 of 100

Modest

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

Allient

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marchex and Allient

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

The idea behind Marchex and Allient 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 Commodity Directory module to find actively traded commodities issued by global exchanges.