Correlation Between Virginia National and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Virginia National 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 Virginia National and Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virginia National Bankshares and Ally Financial, you can compare the effects of market volatilities on Virginia National 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 Virginia National with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and Ally Financial.
Diversification Opportunities for Virginia National and Ally Financial
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Virginia and Ally is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and Virginia National 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 Virginia National Bankshares 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 Virginia National i.e., Virginia National and Ally Financial go up and down completely randomly.
Pair Corralation between Virginia National and Ally Financial
Given the investment horizon of 90 days Virginia National is expected to generate 2.42 times less return on investment than Ally Financial. But when comparing it to its historical volatility, Virginia National Bankshares is 1.25 times less risky than Ally Financial. It trades about 0.09 of its potential returns per unit of risk. Ally Financial is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,415 in Ally Financial on August 24, 2024 and sell it today you would earn a total of 304.00 from holding Ally Financial or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virginia National Bankshares vs. Ally Financial
Performance |
| Timeline |
| Virginia National |
| Ally Financial |
Virginia National and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and Ally Financial
The main advantage of trading using opposite Virginia National and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National 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.| Virginia National vs. Finward Bancorp | Virginia National vs. Community West Bancshares | Virginia National vs. First Financial Northwest | Virginia National vs. Oak Valley Bancorp |
| Ally Financial vs. Small Cap Core | Ally Financial vs. Morningstar Unconstrained Allocation | Ally Financial vs. Mutual Of America | Ally Financial vs. Ep Emerging Markets |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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