Correlation Between Qudian and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Qudian 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 Qudian and Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qudian Inc and Ally Financial, you can compare the effects of market volatilities on Qudian 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 Qudian with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and Ally Financial.
Diversification Opportunities for Qudian and Ally Financial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Qudian and Ally is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and Qudian 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 Qudian Inc 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 Qudian i.e., Qudian and Ally Financial go up and down completely randomly.
Pair Corralation between Qudian and Ally Financial
Allowing for the 90-day total investment horizon Qudian is expected to generate 1.78 times less return on investment than Ally Financial. In addition to that, Qudian is 1.49 times more volatile than Ally Financial. It trades about 0.01 of its total potential returns per unit of risk. Ally Financial is currently generating about 0.02 per unit of volatility. If you would invest 3,615 in Ally Financial on August 27, 2024 and sell it today you would earn a total of 170.00 from holding Ally Financial or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qudian Inc vs. Ally Financial
Performance |
| Timeline |
| Qudian Inc |
| Ally Financial |
Qudian and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qudian and Ally Financial
The main advantage of trading using opposite Qudian and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian 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.The idea behind Qudian Inc and Ally Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ally Financial vs. American Express | Ally Financial vs. Mastercard | Ally Financial vs. Visa Class A | Ally Financial vs. PayPal Holdings |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |