Correlation Between Ionet and Allstate

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

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

Diversification Opportunities for Ionet and Allstate

0.37

Correlation Coefficient

Ionet  Allstate

Weak diversification

The 3 months correlation between Ionet and Allstate is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding ionet and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and Ionet 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 ionet 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 Ionet i.e., Ionet and Allstate go up and down completely randomly.

Pair Corralation between Ionet and Allstate

Assuming the 90 days horizon ionet is expected to under-perform the Allstate. In addition to that, Ionet is 4.76 times more volatile than The Allstate. It trades about -0.17 of its total potential returns per unit of risk. The Allstate is currently generating about -0.02 per unit of volatility. If you would invest  20,439  in The Allstate on December 1, 2024 and sell it today you would lose (524.00) from holding The Allstate or give up 2.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

ionet  vs.  The Allstate

ionet

Risk-Adjusted Performance

Very Weak

Over the last 90 days ionet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for ionet shareholders.

Allstate

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Allstate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Allstate is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ionet and Allstate

The main advantage of trading using opposite Ionet and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ionet 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 ionet 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.