Correlation Between Ally Financial and Futura Medical
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Futura Medical 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 Futura Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Futura Medical, you can compare the effects of market volatilities on Ally Financial and Futura Medical 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 Futura Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Futura Medical.
Diversification Opportunities for Ally Financial and Futura Medical
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ally and Futura is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Ally Financial i.e., Ally Financial and Futura Medical go up and down completely randomly.
Pair Corralation between Ally Financial and Futura Medical
Assuming the 90 days trading horizon Ally Financial is expected to generate 2.38 times less return on investment than Futura Medical. But when comparing it to its historical volatility, Ally Financial is 2.05 times less risky than Futura Medical. It trades about 0.03 of its potential returns per unit of risk. Futura Medical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,730 in Futura Medical on September 14, 2024 and sell it today you would earn a total of 593.00 from holding Futura Medical or generate 21.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ally Financial vs. Futura Medical
Performance |
| Timeline |
| Ally Financial |
| Futura Medical |
Ally Financial and Futura Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Futura Medical
The main advantage of trading using opposite Ally Financial and Futura Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Futura Medical 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 Futura Medical will offset losses from the drop in Futura Medical's long position.| Ally Financial vs. Cars Inc | Ally Financial vs. Caledonia Mining | Ally Financial vs. CAP LEASE AVIATION | Ally Financial vs. Atalaya Mining |
| Futura Medical vs. Hochschild Mining plc | Futura Medical vs. Anglesey Mining | Futura Medical vs. Blackrock World Mining | Futura Medical vs. Jacquet Metal Service |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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