Correlation Between Ally Financial and Magnora ASA
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Magnora ASA 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 Magnora ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Magnora ASA, you can compare the effects of market volatilities on Ally Financial and Magnora ASA 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 Magnora ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Magnora ASA.
Diversification Opportunities for Ally Financial and Magnora ASA
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ally and Magnora is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA 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 Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of Ally Financial i.e., Ally Financial and Magnora ASA go up and down completely randomly.
Pair Corralation between Ally Financial and Magnora ASA
Assuming the 90 days trading horizon Ally Financial is expected to generate 0.94 times more return on investment than Magnora ASA. However, Ally Financial is 1.06 times less risky than Magnora ASA. It trades about -0.01 of its potential returns per unit of risk. Magnora ASA is currently generating about -0.01 per unit of risk. If you would invest 3,924 in Ally Financial on September 19, 2024 and sell it today you would lose (250.00) from holding Ally Financial or give up 6.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Ally Financial vs. Magnora ASA
Performance |
| Timeline |
| Ally Financial |
| Magnora ASA |
Ally Financial and Magnora ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Magnora ASA
The main advantage of trading using opposite Ally Financial and Magnora ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Magnora ASA 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 Magnora ASA will offset losses from the drop in Magnora ASA's long position.| Ally Financial vs. Verizon Communications | Ally Financial vs. Deltex Medical Group | Ally Financial vs. Gamma Communications PLC | Ally Financial vs. LBG Media PLC |
| Magnora ASA vs. Alior Bank SA | Magnora ASA vs. Compal Electronics GDR | Magnora ASA vs. Ally Financial | Magnora ASA vs. Bellevue Healthcare 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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