Correlation Between Ally Financial and Lowe Cos
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Lowe Cos 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 Lowe Cos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Lowe Cos, you can compare the effects of market volatilities on Ally Financial and Lowe Cos 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 Lowe Cos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Lowe Cos.
Diversification Opportunities for Ally Financial and Lowe Cos
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ally and Lowe is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Lowe Cos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowe Cos 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 Lowe Cos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowe Cos has no effect on the direction of Ally Financial i.e., Ally Financial and Lowe Cos go up and down completely randomly.
Pair Corralation between Ally Financial and Lowe Cos
If you would invest 3,766 in Ally Financial on September 12, 2024 and sell it today you would earn a total of 86.00 from holding Ally Financial or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Ally Financial vs. Lowe Cos
Performance |
| Timeline |
| Ally Financial |
| Lowe Cos |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ally Financial and Lowe Cos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Lowe Cos
The main advantage of trading using opposite Ally Financial and Lowe Cos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Lowe Cos 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 Lowe Cos will offset losses from the drop in Lowe Cos' long position.| Ally Financial vs. Air Products Chemicals | Ally Financial vs. X FAB Silicon Foundries | Ally Financial vs. Wheaton Precious Metals | Ally Financial vs. Verizon Communications |
| Lowe Cos vs. Playtech Plc | Lowe Cos vs. DFS Furniture PLC | Lowe Cos vs. Public Storage | Lowe Cos vs. Bankers Investment Trust |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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