Correlation Between Ally Financial and FirstCash
Can any of the company-specific risk be diversified away by investing in both Ally Financial and FirstCash 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 FirstCash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and FirstCash, you can compare the effects of market volatilities on Ally Financial and FirstCash 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 FirstCash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and FirstCash.
Diversification Opportunities for Ally Financial and FirstCash
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ally and FirstCash is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and FirstCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstCash 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 FirstCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstCash has no effect on the direction of Ally Financial i.e., Ally Financial and FirstCash go up and down completely randomly.
Pair Corralation between Ally Financial and FirstCash
Given the investment horizon of 90 days Ally Financial is expected to generate 1.0 times more return on investment than FirstCash. However, Ally Financial is 1.0 times more volatile than FirstCash. It trades about 0.08 of its potential returns per unit of risk. FirstCash is currently generating about -0.09 per unit of risk. If you would invest 3,442 in Ally Financial on August 23, 2024 and sell it today you would earn a total of 111.00 from holding Ally Financial or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ally Financial vs. FirstCash
Performance |
| Timeline |
| Ally Financial |
| FirstCash |
Ally Financial and FirstCash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and FirstCash
The main advantage of trading using opposite Ally Financial and FirstCash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, FirstCash 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 FirstCash will offset losses from the drop in FirstCash's long position.| Ally Financial vs. Small Cap Core | Ally Financial vs. Morningstar Unconstrained Allocation | Ally Financial vs. Mutual Of America | Ally Financial vs. Ep Emerging Markets |
| FirstCash vs. World Acceptance | FirstCash vs. Enova International | FirstCash vs. Green Dot | FirstCash vs. Medallion Financial Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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