Correlation Between Strickland Metals and Allegiance Coal

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

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

Diversification Opportunities for Strickland Metals and Allegiance Coal

0.0

Correlation Coefficient

Strickland Metals  Allegiance Coal

Pay attention - limited upside

The 3 months correlation between Strickland and Allegiance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Strickland Metals and Allegiance Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiance Coal and Strickland Metals 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 Strickland Metals are associated (or correlated) with Allegiance Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegiance Coal has no effect on the direction of Strickland Metals i.e., Strickland Metals and Allegiance Coal go up and down completely randomly.

Pair Corralation between Strickland Metals and Allegiance Coal

If you would invest  7.60  in Strickland Metals on October 21, 2024 and sell it today you would earn a total of  0.70  from holding Strickland Metals or generate 9.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Strickland Metals  vs.  Allegiance Coal

Strickland Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Strickland Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, Strickland Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Allegiance Coal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegiance Coal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Allegiance Coal is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Strickland Metals and Allegiance Coal

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

The idea behind Strickland Metals and Allegiance Coal 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.