Correlation Between Ally Financial and Consumer Portfolio
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Consumer Portfolio 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 Consumer Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Consumer Portfolio Services, you can compare the effects of market volatilities on Ally Financial and Consumer Portfolio 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 Consumer Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Consumer Portfolio.
Diversification Opportunities for Ally Financial and Consumer Portfolio
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ally and Consumer is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Consumer Portfolio Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Portfolio 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 Consumer Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Portfolio has no effect on the direction of Ally Financial i.e., Ally Financial and Consumer Portfolio go up and down completely randomly.
Pair Corralation between Ally Financial and Consumer Portfolio
Given the investment horizon of 90 days Ally Financial is expected to generate 3.28 times less return on investment than Consumer Portfolio. But when comparing it to its historical volatility, Ally Financial is 1.26 times less risky than Consumer Portfolio. It trades about 0.03 of its potential returns per unit of risk. Consumer Portfolio Services is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 825.00 in Consumer Portfolio Services on September 1, 2024 and sell it today you would earn a total of 211.00 from holding Consumer Portfolio Services or generate 25.58% 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. Consumer Portfolio Services
Performance |
| Timeline |
| Ally Financial |
| Consumer Portfolio |
Ally Financial and Consumer Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Consumer Portfolio
The main advantage of trading using opposite Ally Financial and Consumer Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Consumer Portfolio 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 Consumer Portfolio will offset losses from the drop in Consumer Portfolio's long position.| Ally Financial vs. American Express | Ally Financial vs. Mastercard | Ally Financial vs. Visa Class A | Ally Financial vs. PayPal Holdings |
| Consumer Portfolio vs. Atlanticus Holdings Corp | Consumer Portfolio vs. Mill City Ventures | Consumer Portfolio vs. Nelnet Inc | Consumer Portfolio vs. Senmiao Technology |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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