Correlation Between Ally Financial and Jadestone Energy
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Jadestone Energy 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 Jadestone Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Jadestone Energy, you can compare the effects of market volatilities on Ally Financial and Jadestone Energy 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 Jadestone Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Jadestone Energy.
Diversification Opportunities for Ally Financial and Jadestone Energy
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ally and Jadestone is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Jadestone Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jadestone Energy 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 Jadestone Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jadestone Energy has no effect on the direction of Ally Financial i.e., Ally Financial and Jadestone Energy go up and down completely randomly.
Pair Corralation between Ally Financial and Jadestone Energy
Assuming the 90 days trading horizon Ally Financial is expected to generate 1.16 times more return on investment than Jadestone Energy. However, Ally Financial is 1.16 times more volatile than Jadestone Energy. It trades about 0.3 of its potential returns per unit of risk. Jadestone Energy is currently generating about -0.04 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ally Financial vs. Jadestone Energy
Performance |
| Timeline |
| Ally Financial |
| Jadestone Energy |
Ally Financial and Jadestone Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Jadestone Energy
The main advantage of trading using opposite Ally Financial and Jadestone Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Jadestone Energy 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 Jadestone Energy will offset losses from the drop in Jadestone Energy'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 |
| Jadestone Energy vs. Ally Financial | Jadestone Energy vs. Hochschild Mining plc | Jadestone Energy vs. Sydbank | Jadestone Energy vs. Metals Exploration 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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