Correlation Between Ithaca Energy and Alliance Data
Can any of the company-specific risk be diversified away by investing in both Ithaca Energy 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 Ithaca Energy and Alliance Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ithaca Energy PLC and Alliance Data Systems, you can compare the effects of market volatilities on Ithaca Energy 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 Ithaca Energy with a short position of Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ithaca Energy and Alliance Data.
Diversification Opportunities for Ithaca Energy and Alliance Data
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ithaca and Alliance is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ithaca Energy PLC 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 Ithaca Energy 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 Ithaca Energy PLC 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 Ithaca Energy i.e., Ithaca Energy and Alliance Data go up and down completely randomly.
Pair Corralation between Ithaca Energy and Alliance Data
Assuming the 90 days trading horizon Ithaca Energy is expected to generate 2.39 times less return on investment than Alliance Data. In addition to that, Ithaca Energy is 1.0 times more volatile than Alliance Data Systems. It trades about 0.08 of its total potential returns per unit of risk. Alliance Data Systems is currently generating about 0.18 per unit of volatility. 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 Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ithaca Energy PLC vs. Alliance Data Systems
Performance |
| Timeline |
| Ithaca Energy PLC |
| Alliance Data Systems |
Ithaca Energy and Alliance Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ithaca Energy and Alliance Data
The main advantage of trading using opposite Ithaca Energy and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ithaca Energy 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.| Ithaca Energy vs. Alliance Data Systems | Ithaca Energy vs. Infrastrutture Wireless Italiane | Ithaca Energy vs. Cairo Communication SpA | Ithaca Energy vs. Ion Beam Applications |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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