Correlation Between Ally Financial and UNIQA Insurance
Can any of the company-specific risk be diversified away by investing in both Ally Financial and UNIQA Insurance 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 Ally Financial and UNIQA Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and UNIQA Insurance Group, you can compare the effects of market volatilities on Ally Financial and UNIQA Insurance 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 Ally Financial with a short position of UNIQA Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and UNIQA Insurance.
Diversification Opportunities for Ally Financial and UNIQA Insurance
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ally and UNIQA is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and UNIQA Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQA Insurance Group and Ally Financial 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 Ally Financial are associated (or correlated) with UNIQA Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIQA Insurance Group has no effect on the direction of Ally Financial i.e., Ally Financial and UNIQA Insurance go up and down completely randomly.
Pair Corralation between Ally Financial and UNIQA Insurance
Assuming the 90 days trading horizon Ally Financial is expected to generate 2.33 times more return on investment than UNIQA Insurance. However, Ally Financial is 2.33 times more volatile than UNIQA Insurance Group. It trades about 0.29 of its potential returns per unit of risk. UNIQA Insurance Group is currently generating about 0.0 per unit of risk. If you would invest 3,490 in Ally Financial on September 1, 2024 and sell it today you would earn a total of 504.00 from holding Ally Financial or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ally Financial vs. UNIQA Insurance Group
Performance |
| Timeline |
| Ally Financial |
| UNIQA Insurance Group |
Ally Financial and UNIQA Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and UNIQA Insurance
The main advantage of trading using opposite Ally Financial and UNIQA Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, UNIQA Insurance 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 UNIQA Insurance will offset losses from the drop in UNIQA Insurance's long position.| Ally Financial vs. Uniper SE | Ally Financial vs. Mulberry Group PLC | Ally Financial vs. London Security Plc | Ally Financial vs. Triad Group PLC |
| UNIQA Insurance vs. Uniper SE | UNIQA Insurance vs. Mulberry Group PLC | UNIQA Insurance vs. London Security Plc | UNIQA Insurance vs. Triad Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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