Correlation Between Alliance Data and GlobalData PLC
Can any of the company-specific risk be diversified away by investing in both Alliance Data and GlobalData PLC 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 GlobalData PLC 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 GlobalData PLC, you can compare the effects of market volatilities on Alliance Data and GlobalData PLC 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 GlobalData PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and GlobalData PLC.
Diversification Opportunities for Alliance Data and GlobalData PLC
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alliance and GlobalData is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and GlobalData PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalData PLC 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 GlobalData PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalData PLC has no effect on the direction of Alliance Data i.e., Alliance Data and GlobalData PLC go up and down completely randomly.
Pair Corralation between Alliance Data and GlobalData PLC
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 2.29 times more return on investment than GlobalData PLC. However, Alliance Data is 2.29 times more volatile than GlobalData PLC. It trades about 0.17 of its potential returns per unit of risk. GlobalData PLC is currently generating about 0.08 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. GlobalData PLC
Performance |
| Timeline |
| Alliance Data Systems |
| GlobalData PLC |
Alliance Data and GlobalData PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and GlobalData PLC
The main advantage of trading using opposite Alliance Data and GlobalData PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data position performs unexpectedly, GlobalData PLC 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 GlobalData PLC will offset losses from the drop in GlobalData PLC's 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 |
| GlobalData PLC vs. Catalyst Media Group | GlobalData PLC vs. CATLIN GROUP | GlobalData PLC vs. Tamburi Investment Partners | GlobalData PLC vs. Magnora ASA |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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