Correlation Between Ally Financial and Argo Group
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Argo Group 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 Argo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Argo Group Limited, you can compare the effects of market volatilities on Ally Financial and Argo Group 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 Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Argo Group.
Diversification Opportunities for Ally Financial and Argo Group
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ally and Argo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Argo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group Limited 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 Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group Limited has no effect on the direction of Ally Financial i.e., Ally Financial and Argo Group go up and down completely randomly.
Pair Corralation between Ally Financial and Argo Group
Assuming the 90 days trading horizon Ally Financial is expected to generate 1.11 times more return on investment than Argo Group. However, Ally Financial is 1.11 times more volatile than Argo Group Limited. It trades about 0.3 of its potential returns per unit of risk. Argo Group Limited is currently generating about 0.01 per unit of risk. If you would invest 3,473 in Ally Financial on September 2, 2024 and sell it today you would earn a total of 521.00 from holding Ally Financial or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ally Financial vs. Argo Group Limited
Performance |
| Timeline |
| Ally Financial |
| Argo Group Limited |
Ally Financial and Argo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Argo Group
The main advantage of trading using opposite Ally Financial and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Argo Group 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 Argo Group will offset losses from the drop in Argo Group'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 |
| Argo Group vs. Allianz Technology Trust | Argo Group vs. Uber Technologies | Argo Group vs. UNIQA Insurance Group | Argo Group vs. Lendinvest 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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