Correlation Between Futura Medical and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Futura Medical 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 Futura Medical and Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Futura Medical and Ally Financial, you can compare the effects of market volatilities on Futura Medical 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 Futura Medical with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futura Medical and Ally Financial.
Diversification Opportunities for Futura Medical and Ally Financial
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Futura and Ally is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Futura Medical and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and Futura Medical 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 Futura Medical 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 Futura Medical i.e., Futura Medical and Ally Financial go up and down completely randomly.
Pair Corralation between Futura Medical and Ally Financial
Assuming the 90 days trading horizon Futura Medical is expected to generate 2.05 times more return on investment than Ally Financial. However, Futura Medical is 2.05 times more volatile than Ally Financial. It trades about 0.04 of its potential returns per unit of risk. Ally Financial is currently generating about 0.03 per unit of risk. If you would invest 2,730 in Futura Medical on September 14, 2024 and sell it today you would earn a total of 593.00 from holding Futura Medical or generate 21.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Futura Medical vs. Ally Financial
Performance |
| Timeline |
| Futura Medical |
| Ally Financial |
Futura Medical and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Futura Medical and Ally Financial
The main advantage of trading using opposite Futura Medical and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futura Medical 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.| Futura Medical vs. Hochschild Mining plc | Futura Medical vs. Anglesey Mining | Futura Medical vs. Blackrock World Mining | Futura Medical vs. Jacquet Metal Service |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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