Correlation Between LBG Media and Ally Financial
Can any of the company-specific risk be diversified away by investing in both LBG Media 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 LBG Media and Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LBG Media PLC and Ally Financial, you can compare the effects of market volatilities on LBG Media 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 LBG Media with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Ally Financial.
Diversification Opportunities for LBG Media and Ally Financial
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LBG and Ally is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and LBG Media 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 LBG Media PLC 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 LBG Media i.e., LBG Media and Ally Financial go up and down completely randomly.
Pair Corralation between LBG Media and Ally Financial
Assuming the 90 days trading horizon LBG Media PLC is expected to generate 1.17 times more return on investment than Ally Financial. However, LBG Media is 1.17 times more volatile than Ally Financial. It trades about 0.07 of its potential returns per unit of risk. Ally Financial is currently generating about 0.03 per unit of risk. If you would invest 8,250 in LBG Media PLC on September 19, 2024 and sell it today you would earn a total of 3,950 from holding LBG Media PLC or generate 47.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LBG Media PLC vs. Ally Financial
Performance |
| Timeline |
| LBG Media PLC |
| Ally Financial |
LBG Media and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBG Media and Ally Financial
The main advantage of trading using opposite LBG Media and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media 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.| LBG Media vs. Quantum Blockchain Technologies | LBG Media vs. Versarien PLC | LBG Media vs. Argo Group Limited | LBG Media vs. Tungsten West PLC |
| Ally Financial vs. Verizon Communications | Ally Financial vs. Deltex Medical Group | Ally Financial vs. Gamma Communications PLC | Ally Financial vs. LBG Media PLC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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