Correlation Between Ihuman and Allstate

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

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

Diversification Opportunities for Ihuman and Allstate

0.67

Correlation Coefficient

Ihuman  Allstate

Poor diversification

The 3 months correlation between Ihuman and Allstate is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ihuman Inc and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and Ihuman 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 Ihuman Inc 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 Ihuman i.e., Ihuman and Allstate go up and down completely randomly.

Pair Corralation between Ihuman and Allstate

Allowing for the 90-day total investment horizon Ihuman Inc is expected to under-perform the Allstate. In addition to that, Ihuman is 3.86 times more volatile than The Allstate. It trades about -0.11 of its total potential returns per unit of risk. The Allstate is currently generating about -0.11 per unit of volatility. If you would invest  2,755  in The Allstate on September 4, 2024 and sell it today you would lose (41.00) from holding The Allstate or give up 1.49% of portfolio value over 90 days.

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

Ihuman Inc  vs.  The Allstate

Ihuman Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ihuman Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Ihuman is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Allstate

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady essential indicators, Allstate is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Ihuman and Allstate

The main advantage of trading using opposite Ihuman and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ihuman 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 Ihuman Inc 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.