Correlation Between Alamo and Tredegar

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

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

Diversification Opportunities for Alamo and Tredegar

0.88

Correlation Coefficient

Alamo  Tredegar

Very poor diversification

The 3 months correlation between Alamo and Tredegar is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Tredegar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tredegar and Alamo 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 Alamo Group are associated (or correlated) with Tredegar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tredegar has no effect on the direction of Alamo i.e., Alamo and Tredegar go up and down completely randomly.

Pair Corralation between Alamo and Tredegar

Considering the 90-day investment horizon Alamo Group is expected to generate 0.97 times more return on investment than Tredegar. However, Alamo Group is 1.03 times less risky than Tredegar. It trades about 0.23 of its potential returns per unit of risk. Tredegar is currently generating about 0.02 per unit of risk. If you would invest  17,230  in Alamo Group on May 6, 2025 and sell it today you would earn a total of  4,332  from holding Alamo Group or generate 25.14% return on investment over 90 days.

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

Alamo Group  vs.  Tredegar

Alamo Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alamo Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady essential indicators, Alamo reported solid returns over the last few months and may actually be approaching a breakup point.

Tredegar

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tredegar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Tredegar is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alamo and Tredegar

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

The idea behind Alamo Group and Tredegar 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.