Correlation Between Alliance Data and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Alliance Data and Gamma Communications 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 Gamma Communications 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 Gamma Communications PLC, you can compare the effects of market volatilities on Alliance Data and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and Gamma Communications.
Diversification Opportunities for Alliance Data and Gamma Communications
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alliance and Gamma is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of Alliance Data i.e., Alliance Data and Gamma Communications go up and down completely randomly.
Pair Corralation between Alliance Data and Gamma Communications
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 2.07 times more return on investment than Gamma Communications. However, Alliance Data is 2.07 times more volatile than Gamma Communications PLC. It trades about 0.13 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about 0.11 per unit of risk. If you would invest 2,698 in Alliance Data Systems on September 14, 2024 and sell it today you would earn a total of 3,895 from holding Alliance Data Systems or generate 144.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.38% |
| Values | Daily Returns |
Alliance Data Systems vs. Gamma Communications PLC
Performance |
| Timeline |
| Alliance Data Systems |
| Gamma Communications PLC |
Alliance Data and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and Gamma Communications
The main advantage of trading using opposite Alliance Data and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| Alliance Data vs. Ecclesiastical Insurance Office | Alliance Data vs. Iron Mountain | Alliance Data vs. LPKF Laser Electronics | Alliance Data vs. Cornish Metals |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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