Correlation Between Under Armour and Allient

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

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

Diversification Opportunities for Under Armour and Allient

0.37

Correlation Coefficient

Under Armour  Allient

Weak diversification

The 3 months correlation between Under and Allient is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and Allient go up and down completely randomly.

Pair Corralation between Under Armour and Allient

Allowing for the 90-day total investment horizon Under Armour is expected to generate 28.97 times less return on investment than Allient. In addition to that, Under Armour is 1.47 times more volatile than Allient. It trades about 0.0 of its total potential returns per unit of risk. Allient is currently generating about 0.08 per unit of volatility. If you would invest  2,065  in Allient on October 3, 2024 and sell it today you would earn a total of  363.00  from holding Allient or generate 17.58% return on investment over 90 days.

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

Under Armour C  vs.  Allient

Under Armour C

Risk-Adjusted Performance

0 of 100

Very Weak

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

Allient

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Under Armour and Allient

The main advantage of trading using opposite Under Armour and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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 Under Armour C 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.