Correlation Between Green Dot and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Green Dot 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 Green Dot and Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Dot and Ally Financial, you can compare the effects of market volatilities on Green Dot 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 Green Dot with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Dot and Ally Financial.
Diversification Opportunities for Green Dot and Ally Financial
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Green and Ally is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Green Dot and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and Green Dot 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 Green Dot 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 Green Dot i.e., Green Dot and Ally Financial go up and down completely randomly.
Pair Corralation between Green Dot and Ally Financial
Given the investment horizon of 90 days Green Dot is expected to under-perform the Ally Financial. In addition to that, Green Dot is 2.56 times more volatile than Ally Financial. It trades about -0.05 of its total potential returns per unit of risk. Ally Financial is currently generating about 0.08 per unit of volatility. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Dot vs. Ally Financial
Performance |
| Timeline |
| Green Dot |
| Ally Financial |
Green Dot and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Dot and Ally Financial
The main advantage of trading using opposite Green Dot and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Dot 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.| Green Dot vs. Small Cap Core | Green Dot vs. Morningstar Unconstrained Allocation | Green Dot vs. Mutual Of America | Green Dot vs. Ep Emerging Markets |
| Ally Financial vs. Small Cap Core | Ally Financial vs. Morningstar Unconstrained Allocation | Ally Financial vs. Mutual Of America | Ally Financial vs. Ep Emerging Markets |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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