Correlation Between Alliance Data and FinecoBank SpA
Can any of the company-specific risk be diversified away by investing in both Alliance Data and FinecoBank SpA 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 FinecoBank SpA 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 FinecoBank SpA, you can compare the effects of market volatilities on Alliance Data and FinecoBank SpA 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 FinecoBank SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and FinecoBank SpA.
Diversification Opportunities for Alliance Data and FinecoBank SpA
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alliance and FinecoBank is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and FinecoBank SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinecoBank SpA 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 FinecoBank SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FinecoBank SpA has no effect on the direction of Alliance Data i.e., Alliance Data and FinecoBank SpA go up and down completely randomly.
Pair Corralation between Alliance Data and FinecoBank SpA
Assuming the 90 days trading horizon Alliance Data is expected to generate 7.27 times less return on investment than FinecoBank SpA. In addition to that, Alliance Data is 1.97 times more volatile than FinecoBank SpA. It trades about 0.02 of its total potential returns per unit of risk. FinecoBank SpA is currently generating about 0.26 per unit of volatility. If you would invest 1,700 in FinecoBank SpA on November 7, 2024 and sell it today you would earn a total of 132.00 from holding FinecoBank SpA or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Alliance Data Systems vs. FinecoBank SpA
Performance |
| Timeline |
| Alliance Data Systems |
| FinecoBank SpA |
Alliance Data and FinecoBank SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and FinecoBank SpA
The main advantage of trading using opposite Alliance Data and FinecoBank SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data position performs unexpectedly, FinecoBank SpA 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 FinecoBank SpA will offset losses from the drop in FinecoBank SpA's long position.| Alliance Data vs. mobilezone holding AG | Alliance Data vs. Aeorema Communications Plc | Alliance Data vs. Wheaton Precious Metals | Alliance Data vs. UNIQA Insurance Group |
| FinecoBank SpA vs. Samsung Electronics Co | FinecoBank SpA vs. Samsung Electronics Co | FinecoBank SpA vs. Toyota Motor Corp | FinecoBank SpA vs. Reliance Industries Ltd |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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