Correlation Between Futuretech and ALLSTATE

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

By analyzing existing cross correlation between Futuretech II Acquisition and ALLSTATE P 45, you can compare the effects of market volatilities on Futuretech 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 Futuretech with a short position of ALLSTATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futuretech and ALLSTATE.

Diversification Opportunities for Futuretech and ALLSTATE

-0.47

Correlation Coefficient

Futuretech  ALLSTATE

Very good diversification

The 3 months correlation between Futuretech and ALLSTATE is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Futuretech II Acquisition and ALLSTATE P 45 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLSTATE P 45 and Futuretech 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 Futuretech II Acquisition 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 P 45 has no effect on the direction of Futuretech i.e., Futuretech and ALLSTATE go up and down completely randomly.

Pair Corralation between Futuretech and ALLSTATE

Given the investment horizon of 90 days Futuretech is expected to generate 84.38 times less return on investment than ALLSTATE. But when comparing it to its historical volatility, Futuretech II Acquisition is 68.73 times less risky than ALLSTATE. It trades about 0.04 of its potential returns per unit of risk. ALLSTATE P 45 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,574  in ALLSTATE P 45 on October 24, 2024 and sell it today you would lose (1,132) from holding ALLSTATE P 45 or give up 11.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.97%
Values	Daily Returns

Futuretech II Acquisition  vs.  ALLSTATE P 45

Futuretech II Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Futuretech II Acquisition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Futuretech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ALLSTATE P 45

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLSTATE P 45 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ALLSTATE P 45 investors.

Pair Trading with Futuretech and ALLSTATE

The main advantage of trading using opposite Futuretech and ALLSTATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futuretech 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 Futuretech II Acquisition and ALLSTATE P 45 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.