Correlation Between Global Ship and Allstate
Can any of the company-specific risk be diversified away by investing in both Global Ship and Allstate 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 Global Ship and Allstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and The Allstate, you can compare the effects of market volatilities on Global Ship and Allstate 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 Global Ship with a short position of Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Allstate.
Diversification Opportunities for Global Ship and Allstate
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Allstate is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and Global Ship 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 Global Ship Lease are associated (or correlated) with Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Global Ship i.e., Global Ship and Allstate go up and down completely randomly.
Pair Corralation between Global Ship and Allstate
Assuming the 90 days horizon Global Ship Lease is expected to generate 0.74 times more return on investment than Allstate. However, Global Ship Lease is 1.36 times less risky than Allstate. It trades about 0.05 of its potential returns per unit of risk. The Allstate is currently generating about -0.01 per unit of risk. If you would invest 2,031 in Global Ship Lease on December 4, 2024 and sell it today you would earn a total of 81.00 from holding Global Ship Lease or generate 3.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Global Ship Lease vs. The Allstate
Performance |
Timeline |
Global Ship Lease |
Allstate |
Global Ship and Allstate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Ship and Allstate
The main advantage of trading using opposite Global Ship and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Allstate 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 Allstate will offset losses from the drop in Allstate's long position.Global Ship vs. Alaska Air Group | Global Ship vs. EAGLE MATERIALS | Global Ship vs. Wizz Air Holdings | Global Ship vs. CHINA SOUTHN AIR H |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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