Correlation Between CANON MARKETING and Ally Financial

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

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

Diversification Opportunities for CANON MARKETING and Ally Financial

0.65

Correlation Coefficient

CANON MARKETING  Ally Financial

Poor diversification

The 3 months correlation between CANON and Ally is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CANON MARKETING JP and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and CANON MARKETING 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 CANON MARKETING JP 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 CANON MARKETING i.e., CANON MARKETING and Ally Financial go up and down completely randomly.

Pair Corralation between CANON MARKETING and Ally Financial

Assuming the 90 days trading horizon CANON MARKETING is expected to generate 1.04 times less return on investment than Ally Financial. But when comparing it to its historical volatility, CANON MARKETING JP is 1.74 times less risky than Ally Financial. It trades about 0.14 of its potential returns per unit of risk. Ally Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,143  in Ally Financial on October 8, 2024 and sell it today you would earn a total of  317.00  from holding Ally Financial or generate 10.09% return on investment over 90 days.

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

CANON MARKETING JP  vs.  Ally Financial

CANON MARKETING JP

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CANON MARKETING JP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, CANON MARKETING may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ally Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ally Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Ally Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CANON MARKETING and Ally Financial

The main advantage of trading using opposite CANON MARKETING and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CANON MARKETING 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 CANON MARKETING JP 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.