Correlation Between Ally Financial and Foresight Environmental
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Foresight Environmental 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 Foresight Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Foresight Environmental Infrastructure, you can compare the effects of market volatilities on Ally Financial and Foresight Environmental 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 Foresight Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Foresight Environmental.
Diversification Opportunities for Ally Financial and Foresight Environmental
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ally and Foresight is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Foresight Environmental Infras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foresight Environmental 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 Foresight Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foresight Environmental has no effect on the direction of Ally Financial i.e., Ally Financial and Foresight Environmental go up and down completely randomly.
Pair Corralation between Ally Financial and Foresight Environmental
Assuming the 90 days trading horizon Ally Financial is expected to generate 5.21 times more return on investment than Foresight Environmental. However, Ally Financial is 5.21 times more volatile than Foresight Environmental Infrastructure. It trades about 0.03 of its potential returns per unit of risk. Foresight Environmental Infrastructure is currently generating about -0.11 per unit of risk. If you would invest 3,512 in Ally Financial on November 5, 2024 and sell it today you would earn a total of 387.00 from holding Ally Financial or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Ally Financial vs. Foresight Environmental Infras
Performance |
| Timeline |
| Ally Financial |
| Foresight Environmental |
Ally Financial and Foresight Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Foresight Environmental
The main advantage of trading using opposite Ally Financial and Foresight Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Foresight Environmental 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 Foresight Environmental will offset losses from the drop in Foresight Environmental'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 |
| Foresight Environmental vs. Pentair PLC | Foresight Environmental vs. Fair Oaks Income | Foresight Environmental vs. Porvair plc | Foresight Environmental vs. PPHE Hotel 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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