Correlation Between Ally Financial and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Geely Automobile 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 Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Geely Automobile Holdings, you can compare the effects of market volatilities on Ally Financial and Geely Automobile 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 Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Geely Automobile.
Diversification Opportunities for Ally Financial and Geely Automobile
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ally and Geely is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings 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 Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of Ally Financial i.e., Ally Financial and Geely Automobile go up and down completely randomly.
Pair Corralation between Ally Financial and Geely Automobile
Assuming the 90 days trading horizon Ally Financial is expected to generate 11.04 times less return on investment than Geely Automobile. But when comparing it to its historical volatility, Ally Financial is 3.54 times less risky than Geely Automobile. It trades about 0.03 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 782.00 in Geely Automobile Holdings on November 5, 2024 and sell it today you would earn a total of 718.00 from holding Geely Automobile Holdings or generate 91.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.01% |
| Values | Daily Returns |
Ally Financial vs. Geely Automobile Holdings
Performance |
| Timeline |
| Ally Financial |
| Geely Automobile Holdings |
Ally Financial and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Geely Automobile
The main advantage of trading using opposite Ally Financial and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Geely Automobile 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 Geely Automobile will offset losses from the drop in Geely Automobile's long position.| Ally Financial vs. JD Sports Fashion | Ally Financial vs. Universal Display Corp | Ally Financial vs. Medical Properties Trust | Ally Financial vs. Eastinco Mining Exploration |
| Geely Automobile vs. Coeur Mining | Geely Automobile vs. Primary Health Properties | Geely Automobile vs. Spire Healthcare Group | Geely Automobile vs. Inspiration Healthcare Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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