Correlation Between Kinnevik Investment and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and Ally Financial 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 Kinnevik Investment and Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinnevik Investment AB and Ally Financial, you can compare the effects of market volatilities on Kinnevik Investment and Ally Financial 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 Kinnevik Investment with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and Ally Financial.
Diversification Opportunities for Kinnevik Investment and Ally Financial
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kinnevik and Ally is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and Kinnevik Investment 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 Kinnevik Investment AB are associated (or correlated) with Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Ally Financial go up and down completely randomly.
Pair Corralation between Kinnevik Investment and Ally Financial
Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 1.32 times more return on investment than Ally Financial. However, Kinnevik Investment is 1.32 times more volatile than Ally Financial. It trades about 0.21 of its potential returns per unit of risk. Ally Financial is currently generating about -0.01 per unit of risk. If you would invest 8,144 in Kinnevik Investment AB on November 25, 2024 and sell it today you would earn a total of 826.00 from holding Kinnevik Investment AB or generate 10.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Kinnevik Investment AB vs. Ally Financial
Performance |
Timeline |
Kinnevik Investment |
Ally Financial |
Kinnevik Investment and Ally Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kinnevik Investment and Ally Financial
The main advantage of trading using opposite Kinnevik Investment and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment position performs unexpectedly, Ally Financial 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 Ally Financial will offset losses from the drop in Ally Financial's long position.Kinnevik Investment vs. Wheaton Precious Metals | ||
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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