Correlation Between Freedom Bank and Allient

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

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

Diversification Opportunities for Freedom Bank and Allient

0.17

Correlation Coefficient

Freedom Bank  Allient

Average diversification

The 3 months correlation between Freedom and Allient is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Freedom Bank i.e., Freedom Bank and Allient go up and down completely randomly.

Pair Corralation between Freedom Bank and Allient

Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the Allient. But the otc stock apears to be less risky and, when comparing its historical volatility, Freedom Bank of is 2.29 times less risky than Allient. The otc stock trades about -0.05 of its potential returns per unit of risk. The Allient is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,432  in Allient on September 14, 2024 and sell it today you would lose (739.00) from holding Allient or give up 21.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.98%
Values	Daily Returns

Freedom Bank of  vs.  Allient

Freedom Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Bank of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Freedom Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Allient

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freedom Bank and Allient

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

The idea behind Freedom Bank of and Allient 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.