Correlation Between Alliance Data and Coor Service
Can any of the company-specific risk be diversified away by investing in both Alliance Data and Coor Service 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 Coor Service 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 Coor Service Management, you can compare the effects of market volatilities on Alliance Data and Coor Service 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 Coor Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and Coor Service.
Diversification Opportunities for Alliance Data and Coor Service
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alliance and Coor is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and Coor Service Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coor Service Management 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 Coor Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coor Service Management has no effect on the direction of Alliance Data i.e., Alliance Data and Coor Service go up and down completely randomly.
Pair Corralation between Alliance Data and Coor Service
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 1.5 times more return on investment than Coor Service. However, Alliance Data is 1.5 times more volatile than Coor Service Management. It trades about 0.1 of its potential returns per unit of risk. Coor Service Management is currently generating about -0.06 per unit of risk. If you would invest 3,660 in Alliance Data Systems on August 25, 2024 and sell it today you would earn a total of 2,169 from holding Alliance Data Systems or generate 59.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Alliance Data Systems vs. Coor Service Management
Performance |
| Timeline |
| Alliance Data Systems |
| Coor Service Management |
Alliance Data and Coor Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and Coor Service
The main advantage of trading using opposite Alliance Data and Coor Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data position performs unexpectedly, Coor Service 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 Coor Service will offset losses from the drop in Coor Service'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 |
| Coor Service vs. X FAB Silicon Foundries | Coor Service vs. Invesco Physical Silver | Coor Service vs. Virgin Wines UK | Coor Service vs. iShares Physical Silver |
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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