Correlation Between Vale SA and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Vale SA 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 Vale SA and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA ADR and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Vale SA 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 Vale SA with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Allegheny Technologies.
Diversification Opportunities for Vale SA and Allegheny Technologies
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vale and Allegheny is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA ADR and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Vale SA 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 Vale SA ADR 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 Vale SA i.e., Vale SA and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Vale SA and Allegheny Technologies
Given the investment horizon of 90 days Vale SA is expected to generate 1.05 times less return on investment than Allegheny Technologies. But when comparing it to its historical volatility, Vale SA ADR is 1.93 times less risky than Allegheny Technologies. It trades about 0.32 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 7,750 in Allegheny Technologies Incorporated on September 6, 2025 and sell it today you would earn a total of 2,290 from holding Allegheny Technologies Incorporated or generate 29.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vale SA ADR vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Vale SA ADR |
| Allegheny Technologies |
Vale SA and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Allegheny Technologies
The main advantage of trading using opposite Vale SA and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA 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.| Vale SA vs. Norwegian Air Shuttle | Vale SA vs. NanoTech Entertainment | Vale SA vs. Video Display | Vale SA vs. Westinghouse Air Brake |
| Allegheny Technologies vs. T Mobile US, 5500 | Allegheny Technologies vs. B Communications | Allegheny Technologies vs. Forum Mobile | Allegheny Technologies vs. My Screen Mobile |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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