Correlation Between Alliance Data and Hilton Food
Can any of the company-specific risk be diversified away by investing in both Alliance Data and Hilton Food 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 Hilton Food 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 Hilton Food Group, you can compare the effects of market volatilities on Alliance Data and Hilton Food 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 Hilton Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and Hilton Food.
Diversification Opportunities for Alliance Data and Hilton Food
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alliance and Hilton is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food Group 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 Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of Alliance Data i.e., Alliance Data and Hilton Food go up and down completely randomly.
Pair Corralation between Alliance Data and Hilton Food
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 2.07 times more return on investment than Hilton Food. However, Alliance Data is 2.07 times more volatile than Hilton Food Group. It trades about 0.08 of its potential returns per unit of risk. Hilton Food Group is currently generating about 0.07 per unit of risk. If you would invest 2,930 in Alliance Data Systems on September 1, 2024 and sell it today you would earn a total of 2,970 from holding Alliance Data Systems or generate 101.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.68% |
| Values | Daily Returns |
Alliance Data Systems vs. Hilton Food Group
Performance |
| Timeline |
| Alliance Data Systems |
| Hilton Food Group |
Alliance Data and Hilton Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and Hilton Food
The main advantage of trading using opposite Alliance Data and Hilton Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data position performs unexpectedly, Hilton Food 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 Hilton Food will offset losses from the drop in Hilton Food's long position.| Alliance Data vs. Infrastrutture Wireless Italiane | Alliance Data vs. Monster Beverage Corp | Alliance Data vs. Molson Coors Beverage | Alliance Data vs. Take Two Interactive Software |
| Hilton Food vs. Intermediate Capital Group | Hilton Food vs. Grand Vision Media | Hilton Food vs. BE Semiconductor Industries | Hilton Food vs. JD Sports Fashion |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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