Correlation Between Alignment Healthcare and ALLSTATE

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Can any of the company-specific risk be diversified away by investing in both Alignment Healthcare 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 Alignment Healthcare and ALLSTATE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alignment Healthcare LLC and ALLSTATE P 535, you can compare the effects of market volatilities on Alignment Healthcare 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 Alignment Healthcare with a short position of ALLSTATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alignment Healthcare and ALLSTATE.

Diversification Opportunities for Alignment Healthcare and ALLSTATE

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between Alignment and ALLSTATE is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alignment Healthcare LLC and ALLSTATE P 535 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLSTATE P 535 and Alignment Healthcare 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 Alignment Healthcare LLC 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 P 535 has no effect on the direction of Alignment Healthcare i.e., Alignment Healthcare and ALLSTATE go up and down completely randomly.

Pair Corralation between Alignment Healthcare and ALLSTATE

Given the investment horizon of 90 days Alignment Healthcare LLC is expected to generate 4.2 times more return on investment than ALLSTATE. However, Alignment Healthcare is 4.2 times more volatile than ALLSTATE P 535. It trades about 0.02 of its potential returns per unit of risk. ALLSTATE P 535 is currently generating about 0.0 per unit of risk. If you would invest  1,172  in Alignment Healthcare LLC on October 8, 2024 and sell it today you would lose (2.00) from holding Alignment Healthcare LLC or give up 0.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy82.26%
ValuesDaily Returns

Alignment Healthcare LLC  vs.  ALLSTATE P 535

 Performance 
       Timeline  
Alignment Healthcare LLC 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Alignment Healthcare LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Alignment Healthcare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
ALLSTATE P 535 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ALLSTATE P 535 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alignment Healthcare and ALLSTATE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alignment Healthcare and ALLSTATE

The main advantage of trading using opposite Alignment Healthcare and ALLSTATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alignment Healthcare 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.
The idea behind Alignment Healthcare LLC and ALLSTATE P 535 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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