Correlation Between Alliance Data and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both Alliance Data and Cornish Metals 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 Cornish Metals 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 Cornish Metals, you can compare the effects of market volatilities on Alliance Data and Cornish Metals 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 Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and Cornish Metals.
Diversification Opportunities for Alliance Data and Cornish Metals
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alliance and Cornish is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Alliance Data i.e., Alliance Data and Cornish Metals go up and down completely randomly.
Pair Corralation between Alliance Data and Cornish Metals
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 1.0 times more return on investment than Cornish Metals. However, Alliance Data Systems is 1.0 times less risky than Cornish Metals. It trades about 0.17 of its potential returns per unit of risk. Cornish Metals is currently generating about 0.03 per unit of risk. If you would invest 5,091 in Alliance Data Systems on August 29, 2024 and sell it today you would earn a total of 798.00 from holding Alliance Data Systems or generate 15.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Data Systems vs. Cornish Metals
Performance |
| Timeline |
| Alliance Data Systems |
| Cornish Metals |
Alliance Data and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and Cornish Metals
The main advantage of trading using opposite Alliance Data and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data position performs unexpectedly, Cornish Metals 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| Alliance Data vs. Samsung Electronics Co | Alliance Data vs. Samsung Electronics Co | Alliance Data vs. Hyundai Motor | Alliance Data vs. Toyota Motor Corp |
| Cornish Metals vs. Givaudan SA | Cornish Metals vs. Antofagasta PLC | Cornish Metals vs. Centamin PLC | Cornish Metals vs. Atalaya Mining |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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