Correlation Between National Retail and Allstate

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

By analyzing existing cross correlation between National Retail Properties and The Allstate, you can compare the effects of market volatilities on National Retail 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 National Retail with a short position of Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Allstate.

Diversification Opportunities for National Retail and Allstate

-0.02

Correlation Coefficient

National Retail  Allstate

Good diversification

The 3 months correlation between National and Allstate is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and Allstate go up and down completely randomly.

Pair Corralation between National Retail and Allstate

Assuming the 90 days trading horizon National Retail Properties is expected to generate 0.46 times more return on investment than Allstate. However, National Retail Properties is 2.16 times less risky than Allstate. It trades about -0.05 of its potential returns per unit of risk. The Allstate is currently generating about -0.02 per unit of risk. If you would invest  3,891  in National Retail Properties on October 23, 2024 and sell it today you would lose (41.00) from holding National Retail Properties or give up 1.05% of portfolio value over 90 days.

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

National Retail Properties  vs.  The Allstate

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Allstate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Allstate is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National Retail and Allstate

The main advantage of trading using opposite National Retail and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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 National Retail Properties and The Allstate 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.