Correlation Between Ally Financial and Metal Sky

Can any of the company-specific risk be diversified away by investing in both Ally Financial and Metal Sky 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 Ally Financial and Metal Sky into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ally Financial and Metal Sky Star, you can compare the effects of market volatilities on Ally Financial and Metal Sky 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 Ally Financial with a short position of Metal Sky. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Metal Sky.

Diversification Opportunities for Ally Financial and Metal Sky

0.12

Correlation Coefficient

Ally Financial  Metal Sky

Average diversification

The 3 months correlation between Ally and Metal is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star and Ally Financial 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 Ally Financial are associated (or correlated) with Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of Ally Financial i.e., Ally Financial and Metal Sky go up and down completely randomly.

Pair Corralation between Ally Financial and Metal Sky

Given the investment horizon of 90 days Ally Financial is expected to generate 1.26 times more return on investment than Metal Sky. However, Ally Financial is 1.26 times more volatile than Metal Sky Star. It trades about 0.05 of its potential returns per unit of risk. Metal Sky Star is currently generating about 0.02 per unit of risk. If you would invest  3,538  in Ally Financial on December 27, 2024 and sell it today you would earn a total of  194.00  from holding Ally Financial or generate 5.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ally Financial  vs.  Metal Sky Star

Ally Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ally Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Ally Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Metal Sky Star

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Metal Sky is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ally Financial and Metal Sky

The main advantage of trading using opposite Ally Financial and Metal Sky positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Metal Sky 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 Metal Sky will offset losses from the drop in Metal Sky's long position.

The idea behind Ally Financial and Metal Sky Star 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.