Correlation Between Caledonia Mining and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Ally Financial 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 Caledonia Mining and Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Ally Financial, you can compare the effects of market volatilities on Caledonia Mining and Ally Financial 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 Caledonia Mining with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Ally Financial.
Diversification Opportunities for Caledonia Mining and Ally Financial
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caledonia and Ally is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and Caledonia Mining 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 Caledonia Mining are associated (or correlated) with Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Ally Financial go up and down completely randomly.
Pair Corralation between Caledonia Mining and Ally Financial
Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the Ally Financial. In addition to that, Caledonia Mining is 1.27 times more volatile than Ally Financial. It trades about -0.23 of its total potential returns per unit of risk. Ally Financial is currently generating about 0.09 per unit of volatility. If you would invest 3,677 in Ally Financial on September 14, 2024 and sell it today you would earn a total of 117.00 from holding Ally Financial or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Ally Financial
Performance |
| Timeline |
| Caledonia Mining |
| Ally Financial |
Caledonia Mining and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Ally Financial
The main advantage of trading using opposite Caledonia Mining and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Ally Financial 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 Ally Financial will offset losses from the drop in Ally Financial's long position.| Caledonia Mining vs. Allianz Technology Trust | Caledonia Mining vs. HCA Healthcare | Caledonia Mining vs. Worldwide Healthcare Trust | Caledonia Mining vs. Omega Healthcare Investors |
| Ally Financial vs. Cars Inc | Ally Financial vs. Caledonia Mining | Ally Financial vs. CAP LEASE AVIATION | Ally Financial vs. Atalaya Mining |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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