Correlation Between Allison Transmission and Marketing Worldwide
Can any of the company-specific risk be diversified away by investing in both Allison Transmission and Marketing Worldwide 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 Allison Transmission and Marketing Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allison Transmission Holdings and Marketing Worldwide, you can compare the effects of market volatilities on Allison Transmission and Marketing Worldwide 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 Allison Transmission with a short position of Marketing Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allison Transmission and Marketing Worldwide.
Diversification Opportunities for Allison Transmission and Marketing Worldwide
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Allison and Marketing is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Allison Transmission Holdings and Marketing Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marketing Worldwide and Allison Transmission 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 Allison Transmission Holdings are associated (or correlated) with Marketing Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marketing Worldwide has no effect on the direction of Allison Transmission i.e., Allison Transmission and Marketing Worldwide go up and down completely randomly.
Pair Corralation between Allison Transmission and Marketing Worldwide
Given the investment horizon of 90 days Allison Transmission is expected to generate 14.06 times less return on investment than Marketing Worldwide. But when comparing it to its historical volatility, Allison Transmission Holdings is 27.37 times less risky than Marketing Worldwide. It trades about 0.31 of its potential returns per unit of risk. Marketing Worldwide is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 0.03 in Marketing Worldwide on August 26, 2024 and sell it today you would lose (0.01) from holding Marketing Worldwide or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allison Transmission Holdings vs. Marketing Worldwide
Performance |
| Timeline |
| Allison Transmission |
| Marketing Worldwide |
Allison Transmission and Marketing Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allison Transmission and Marketing Worldwide
The main advantage of trading using opposite Allison Transmission and Marketing Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allison Transmission position performs unexpectedly, Marketing Worldwide 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 Marketing Worldwide will offset losses from the drop in Marketing Worldwide's long position.| Allison Transmission vs. Gentex | Allison Transmission vs. Adient PLC | Allison Transmission vs. Autoliv | Allison Transmission vs. Fox Factory Holding |
| Marketing Worldwide vs. Allison Transmission Holdings | Marketing Worldwide vs. Luminar Technologies | Marketing Worldwide vs. Lear Corporation | Marketing Worldwide vs. BorgWarner |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |