Correlation Between Ally Financial and Datagroup
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Datagroup 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 Datagroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Datagroup SE, you can compare the effects of market volatilities on Ally Financial and Datagroup 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 Datagroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Datagroup.
Diversification Opportunities for Ally Financial and Datagroup
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ally and Datagroup is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Datagroup SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datagroup SE 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 Datagroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datagroup SE has no effect on the direction of Ally Financial i.e., Ally Financial and Datagroup go up and down completely randomly.
Pair Corralation between Ally Financial and Datagroup
Assuming the 90 days trading horizon Ally Financial is expected to generate 1.28 times more return on investment than Datagroup. However, Ally Financial is 1.28 times more volatile than Datagroup SE. It trades about 0.05 of its potential returns per unit of risk. Datagroup SE is currently generating about -0.02 per unit of risk. If you would invest 2,403 in Ally Financial on September 3, 2024 and sell it today you would earn a total of 1,525 from holding Ally Financial or generate 63.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Ally Financial vs. Datagroup SE
Performance |
| Timeline |
| Ally Financial |
| Datagroup SE |
Ally Financial and Datagroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Datagroup
The main advantage of trading using opposite Ally Financial and Datagroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Datagroup 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 Datagroup will offset losses from the drop in Datagroup's long position.| Ally Financial vs. Catalyst Media Group | Ally Financial vs. CATLIN GROUP | Ally Financial vs. RTW Venture Fund | Ally Financial vs. Secure Property Development |
| Datagroup vs. Catalyst Media Group | Datagroup vs. CATLIN GROUP | Datagroup vs. RTW Venture Fund | Datagroup vs. Secure Property Development |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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