Correlation Between Peoples Insurance and Allied Machinery
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By analyzing existing cross correlation between Peoples Insurance of and Allied Machinery Co, you can compare the effects of market volatilities on Peoples Insurance and Allied Machinery 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 Peoples Insurance with a short position of Allied Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Insurance and Allied Machinery.
Diversification Opportunities for Peoples Insurance and Allied Machinery
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Peoples and Allied is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Insurance of and Allied Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Machinery and Peoples Insurance 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 Peoples Insurance of are associated (or correlated) with Allied Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Machinery has no effect on the direction of Peoples Insurance i.e., Peoples Insurance and Allied Machinery go up and down completely randomly.
Pair Corralation between Peoples Insurance and Allied Machinery
Assuming the 90 days trading horizon Peoples Insurance of is expected to generate 0.71 times more return on investment than Allied Machinery. However, Peoples Insurance of is 1.4 times less risky than Allied Machinery. It trades about 0.08 of its potential returns per unit of risk. Allied Machinery Co is currently generating about 0.04 per unit of risk. If you would invest 727.00 in Peoples Insurance of on September 13, 2024 and sell it today you would earn a total of 18.00 from holding Peoples Insurance of or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peoples Insurance of vs. Allied Machinery Co
Performance |
| Timeline |
| Peoples Insurance |
| Allied Machinery |
Peoples Insurance and Allied Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peoples Insurance and Allied Machinery
The main advantage of trading using opposite Peoples Insurance and Allied Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Insurance position performs unexpectedly, Allied Machinery 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 Allied Machinery will offset losses from the drop in Allied Machinery's long position.The idea behind Peoples Insurance of and Allied Machinery Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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