Correlation Between Alliance Data and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Alliance Data and XLMedia 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 XLMedia 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 XLMedia PLC, you can compare the effects of market volatilities on Alliance Data and XLMedia 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and XLMedia PLC.
Diversification Opportunities for Alliance Data and XLMedia PLC
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alliance and XLMedia is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Alliance Data i.e., Alliance Data and XLMedia PLC go up and down completely randomly.
Pair Corralation between Alliance Data and XLMedia PLC
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 0.86 times more return on investment than XLMedia PLC. However, Alliance Data Systems is 1.16 times less risky than XLMedia PLC. It trades about 0.11 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.04 per unit of risk. If you would invest 4,466 in Alliance Data Systems on November 3, 2024 and sell it today you would earn a total of 1,806 from holding Alliance Data Systems or generate 40.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Alliance Data Systems vs. XLMedia PLC
Performance |
| Timeline |
| Alliance Data Systems |
| XLMedia PLC |
Alliance Data and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and XLMedia PLC
The main advantage of trading using opposite Alliance Data and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data position performs unexpectedly, XLMedia 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Alliance Data vs. Zegona Communications Plc | Alliance Data vs. Gamma Communications PLC | Alliance Data vs. Primary Health Properties | Alliance Data vs. Qurate Retail Series |
| XLMedia PLC vs. UNIQA Insurance Group | XLMedia PLC vs. BE Semiconductor Industries | XLMedia PLC vs. Europa Metals | XLMedia PLC vs. Spirent Communications plc |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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