Correlation Between Ally Financial and SINGAPORE AIRLINES
Can any of the company-specific risk be diversified away by investing in both Ally Financial and SINGAPORE AIRLINES 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 Ally Financial and SINGAPORE AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and SINGAPORE AIRLINES, you can compare the effects of market volatilities on Ally Financial and SINGAPORE AIRLINES 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 Ally Financial with a short position of SINGAPORE AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and SINGAPORE AIRLINES.
Diversification Opportunities for Ally Financial and SINGAPORE AIRLINES
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ally and SINGAPORE is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES and Ally Financial 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 Ally Financial are associated (or correlated) with SINGAPORE AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINGAPORE AIRLINES has no effect on the direction of Ally Financial i.e., Ally Financial and SINGAPORE AIRLINES go up and down completely randomly.
Pair Corralation between Ally Financial and SINGAPORE AIRLINES
Assuming the 90 days horizon Ally Financial is expected to generate 2.57 times more return on investment than SINGAPORE AIRLINES. However, Ally Financial is 2.57 times more volatile than SINGAPORE AIRLINES. It trades about 0.03 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about 0.03 per unit of risk. If you would invest 3,744 in Ally Financial on October 28, 2024 and sell it today you would earn a total of 71.00 from holding Ally Financial or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ally Financial vs. SINGAPORE AIRLINES
Performance |
| Timeline |
| Ally Financial |
| SINGAPORE AIRLINES |
Ally Financial and SINGAPORE AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and SINGAPORE AIRLINES
The main advantage of trading using opposite Ally Financial and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, SINGAPORE AIRLINES 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 SINGAPORE AIRLINES will offset losses from the drop in SINGAPORE AIRLINES's long position.| Ally Financial vs. DIVERSIFIED ROYALTY | Ally Financial vs. Federal Home Loan | Ally Financial vs. Hoist Finance AB |
| SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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