Correlation Between SIMON and Allegheny Technologies

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Can any of the company-specific risk be diversified away by investing in both SIMON and Allegheny Technologies 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 SIMON and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMON PPTY GROUP and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on SIMON and Allegheny Technologies 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 SIMON with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMON and Allegheny Technologies.

Diversification Opportunities for SIMON and Allegheny Technologies

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between SIMON and Allegheny is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SIMON PPTY GROUP and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and SIMON 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 SIMON PPTY GROUP are associated (or correlated) with Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of SIMON i.e., SIMON and Allegheny Technologies go up and down completely randomly.

Pair Corralation between SIMON and Allegheny Technologies

Assuming the 90 days trading horizon SIMON PPTY GROUP is expected to generate 34.33 times more return on investment than Allegheny Technologies. However, SIMON is 34.33 times more volatile than Allegheny Technologies Incorporated. It trades about 0.07 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.06 per unit of risk. If you would invest  8,645  in SIMON PPTY GROUP on September 16, 2024 and sell it today you would earn a total of  444.00  from holding SIMON PPTY GROUP or generate 5.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy65.32%
ValuesDaily Returns

SIMON PPTY GROUP  vs.  Allegheny Technologies Incorpo

 Performance 
       Timeline  
SIMON PPTY GROUP 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SIMON PPTY GROUP investors.
Allegheny Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

SIMON and Allegheny Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SIMON and Allegheny Technologies

The main advantage of trading using opposite SIMON and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMON position performs unexpectedly, Allegheny Technologies 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 Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.
The idea behind SIMON PPTY GROUP and Allegheny Technologies Incorporated 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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