Correlation Between Alliance Data and G5 Entertainment
Can any of the company-specific risk be diversified away by investing in both Alliance Data and G5 Entertainment 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 Alliance Data and G5 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Data Systems and G5 Entertainment AB, you can compare the effects of market volatilities on Alliance Data and G5 Entertainment 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 Alliance Data with a short position of G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and G5 Entertainment.
Diversification Opportunities for Alliance Data and G5 Entertainment
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alliance and 0QUS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and G5 Entertainment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment and Alliance Data 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 Alliance Data Systems are associated (or correlated) with G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment has no effect on the direction of Alliance Data i.e., Alliance Data and G5 Entertainment go up and down completely randomly.
Pair Corralation between Alliance Data and G5 Entertainment
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 1.44 times more return on investment than G5 Entertainment. However, Alliance Data is 1.44 times more volatile than G5 Entertainment AB. It trades about 0.12 of its potential returns per unit of risk. G5 Entertainment AB is currently generating about -0.05 per unit of risk. If you would invest 2,723 in Alliance Data Systems on August 25, 2024 and sell it today you would earn a total of 3,106 from holding Alliance Data Systems or generate 114.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.55% |
| Values | Daily Returns |
Alliance Data Systems vs. G5 Entertainment AB
Performance |
| Timeline |
| Alliance Data Systems |
| G5 Entertainment |
Alliance Data and G5 Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and G5 Entertainment
The main advantage of trading using opposite Alliance Data and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.| Alliance Data vs. European Metals Holdings | Alliance Data vs. Arrow Electronics | Alliance Data vs. Sovereign Metals | Alliance Data vs. Fulcrum Metals PLC |
| G5 Entertainment vs. Samsung Electronics Co | G5 Entertainment vs. Samsung Electronics Co | G5 Entertainment vs. Hyundai Motor | G5 Entertainment vs. Toyota Motor Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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