Correlation Between Ally Financial and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both Ally Financial and CleanTech Lithium 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 CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and CleanTech Lithium plc, you can compare the effects of market volatilities on Ally Financial and CleanTech Lithium 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 CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and CleanTech Lithium.
Diversification Opportunities for Ally Financial and CleanTech Lithium
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ally and CleanTech is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc 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 CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Ally Financial i.e., Ally Financial and CleanTech Lithium go up and down completely randomly.
Pair Corralation between Ally Financial and CleanTech Lithium
Assuming the 90 days trading horizon Ally Financial is expected to generate 0.45 times more return on investment than CleanTech Lithium. However, Ally Financial is 2.21 times less risky than CleanTech Lithium. It trades about 0.06 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.05 per unit of risk. If you would invest 2,629 in Ally Financial on September 2, 2024 and sell it today you would earn a total of 1,365 from holding Ally Financial or generate 51.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Ally Financial vs. CleanTech Lithium plc
Performance |
| Timeline |
| Ally Financial |
| CleanTech Lithium plc |
Ally Financial and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and CleanTech Lithium
The main advantage of trading using opposite Ally Financial and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium'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 |
| CleanTech Lithium vs. Givaudan SA | CleanTech Lithium vs. Antofagasta PLC | CleanTech Lithium vs. Centamin PLC | CleanTech Lithium vs. Atalaya Mining |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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