Correlation Between Dentsply Sirona and Allstate

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

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

Diversification Opportunities for Dentsply Sirona and Allstate

-0.74

Correlation Coefficient

Dentsply Sirona  Allstate

Pay attention - limited upside

The 3 months correlation between Dentsply and Allstate is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and Dentsply Sirona 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 Dentsply Sirona 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 Dentsply Sirona i.e., Dentsply Sirona and Allstate go up and down completely randomly.

Pair Corralation between Dentsply Sirona and Allstate

Assuming the 90 days horizon Dentsply Sirona is expected to under-perform the Allstate. In addition to that, Dentsply Sirona is 2.62 times more volatile than The Allstate. It trades about -0.06 of its total potential returns per unit of risk. The Allstate is currently generating about 0.16 per unit of volatility. If you would invest  16,318  in The Allstate on October 8, 2024 and sell it today you would earn a total of  2,402  from holding The Allstate or generate 14.72% return on investment over 90 days.

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

Dentsply Sirona  vs.  The Allstate

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Allstate

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Allstate reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dentsply Sirona and Allstate

The main advantage of trading using opposite Dentsply Sirona and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dentsply Sirona 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 Dentsply Sirona 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.