Correlation Between Alior Bank and L3Harris Technologies
Can any of the company-specific risk be diversified away by investing in both Alior Bank and L3Harris Technologies 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 Alior Bank and L3Harris Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alior Bank SA and L3Harris Technologies, you can compare the effects of market volatilities on Alior Bank and L3Harris Technologies 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 Alior Bank with a short position of L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and L3Harris Technologies.
Diversification Opportunities for Alior Bank and L3Harris Technologies
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alior and L3Harris is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies and Alior Bank 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 Alior Bank SA are associated (or correlated) with L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Alior Bank i.e., Alior Bank and L3Harris Technologies go up and down completely randomly.
Pair Corralation between Alior Bank and L3Harris Technologies
Assuming the 90 days trading horizon Alior Bank is expected to generate 3.27 times less return on investment than L3Harris Technologies. In addition to that, Alior Bank is 2.37 times more volatile than L3Harris Technologies. It trades about 0.01 of its total potential returns per unit of risk. L3Harris Technologies is currently generating about 0.1 per unit of volatility. If you would invest 21,240 in L3Harris Technologies on October 20, 2024 and sell it today you would earn a total of 483.00 from holding L3Harris Technologies or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Alior Bank SA vs. L3Harris Technologies
Performance |
| Timeline |
| Alior Bank SA |
| L3Harris Technologies |
Alior Bank and L3Harris Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alior Bank and L3Harris Technologies
The main advantage of trading using opposite Alior Bank and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, L3Harris Technologies 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.| Alior Bank vs. Travel Leisure Co | Alior Bank vs. Metro Bank PLC | Alior Bank vs. Synchrony Financial | Alior Bank vs. Ally Financial |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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