Correlation Between Alliance Data and Media
Can any of the company-specific risk be diversified away by investing in both Alliance Data and Media 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 Alliance Data and Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Data Systems and Media and Games, you can compare the effects of market volatilities on Alliance Data and Media 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 Alliance Data with a short position of Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and Media.
Diversification Opportunities for Alliance Data and Media
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alliance and Media is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games and Alliance Data 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 Alliance Data Systems are associated (or correlated) with Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of Alliance Data i.e., Alliance Data and Media go up and down completely randomly.
Pair Corralation between Alliance Data and Media
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 0.5 times more return on investment than Media. However, Alliance Data Systems is 1.99 times less risky than Media. It trades about -0.31 of its potential returns per unit of risk. Media and Games is currently generating about -0.18 per unit of risk. If you would invest 6,260 in Alliance Data Systems on October 12, 2024 and sell it today you would lose (532.00) from holding Alliance Data Systems or give up 8.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Data Systems vs. Media and Games
Performance |
| Timeline |
| Alliance Data Systems |
| Media and Games |
Alliance Data and Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and Media
The main advantage of trading using opposite Alliance Data and Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data position performs unexpectedly, Media 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 Media will offset losses from the drop in Media's long position.| Alliance Data vs. Media and Games | Alliance Data vs. PLANT VEDA FOODS | Alliance Data vs. THAI BEVERAGE | Alliance Data vs. CN MODERN DAIRY |
| Media vs. BURLINGTON STORES | Media vs. Cogent Communications Holdings | Media vs. T MOBILE INCDL 00001 | Media vs. Iridium Communications |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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