Correlation Between Batm Advanced and Alliance Data
Can any of the company-specific risk be diversified away by investing in both Batm Advanced and Alliance Data 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 Batm Advanced and Alliance Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Batm Advanced Communications and Alliance Data Systems, you can compare the effects of market volatilities on Batm Advanced and Alliance Data 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 Batm Advanced with a short position of Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Batm Advanced and Alliance Data.
Diversification Opportunities for Batm Advanced and Alliance Data
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Batm and Alliance is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Batm Advanced Communications and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems and Batm Advanced 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 Batm Advanced Communications are associated (or correlated) with Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of Batm Advanced i.e., Batm Advanced and Alliance Data go up and down completely randomly.
Pair Corralation between Batm Advanced and Alliance Data
Assuming the 90 days trading horizon Batm Advanced Communications is expected to under-perform the Alliance Data. But the stock apears to be less risky and, when comparing its historical volatility, Batm Advanced Communications is 1.61 times less risky than Alliance Data. The stock trades about -0.16 of its potential returns per unit of risk. The Alliance Data Systems is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 5,068 in Alliance Data Systems on September 2, 2024 and sell it today you would earn a total of 832.00 from holding Alliance Data Systems or generate 16.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Batm Advanced Communications vs. Alliance Data Systems
Performance |
| Timeline |
| Batm Advanced Commun |
| Alliance Data Systems |
Batm Advanced and Alliance Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Batm Advanced and Alliance Data
The main advantage of trading using opposite Batm Advanced and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Batm Advanced position performs unexpectedly, Alliance Data 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 Alliance Data will offset losses from the drop in Alliance Data's long position.| Batm Advanced vs. Alaska Air Group | Batm Advanced vs. Delta Air Lines | Batm Advanced vs. Silvercorp Metals | Batm Advanced vs. Greenroc Mining PLC |
| Alliance Data vs. Ironveld Plc | Alliance Data vs. Catalyst Media Group | Alliance Data vs. AcadeMedia AB | Alliance Data vs. Futura Medical |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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