Correlation Between Playtech Plc and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Playtech Plc 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 Playtech Plc and Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech Plc and Ally Financial, you can compare the effects of market volatilities on Playtech Plc 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 Playtech Plc with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Ally Financial.
Diversification Opportunities for Playtech Plc and Ally Financial
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Playtech and Ally is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Playtech Plc and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and Playtech Plc 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 Playtech 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 Playtech Plc i.e., Playtech Plc and Ally Financial go up and down completely randomly.
Pair Corralation between Playtech Plc and Ally Financial
Assuming the 90 days trading horizon Playtech Plc is expected to generate 0.62 times more return on investment than Ally Financial. However, Playtech Plc is 1.62 times less risky than Ally Financial. It trades about 0.13 of its potential returns per unit of risk. Ally Financial is currently generating about 0.07 per unit of risk. If you would invest 71,700 in Playtech Plc on September 13, 2024 and sell it today you would earn a total of 2,300 from holding Playtech Plc or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playtech Plc vs. Ally Financial
Performance |
| Timeline |
| Playtech Plc |
| Ally Financial |
Playtech Plc and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and Ally Financial
The main advantage of trading using opposite Playtech Plc and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc 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.| Playtech Plc vs. Kinnevik Investment AB | Playtech Plc vs. Oakley Capital Investments | Playtech Plc vs. FC Investment Trust | Playtech Plc vs. United Utilities Group |
| Ally Financial vs. Cars Inc | Ally Financial vs. Caledonia Mining | Ally Financial vs. CAP LEASE AVIATION | Ally Financial vs. Atalaya Mining |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |