Correlation Between National Atomic and Alliance Data

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

By analyzing existing cross correlation between National Atomic Co and Alliance Data Systems, you can compare the effects of market volatilities on National Atomic and Alliance Data 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 National Atomic with a short position of Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Atomic and Alliance Data.

Diversification Opportunities for National Atomic and Alliance Data

0.26

Correlation Coefficient

National Atomic  Alliance Data

Modest diversification

The 3 months correlation between National and Alliance is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding National Atomic Co and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems and National Atomic 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 National Atomic Co are associated (or correlated) with Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of National Atomic i.e., National Atomic and Alliance Data go up and down completely randomly.

Pair Corralation between National Atomic and Alliance Data

Assuming the 90 days trading horizon National Atomic Co is expected to generate 0.6 times more return on investment than Alliance Data. However, National Atomic Co is 1.67 times less risky than Alliance Data. It trades about -0.03 of its potential returns per unit of risk. Alliance Data Systems is currently generating about -0.08 per unit of risk. If you would invest  3,730  in National Atomic Co on December 26, 2024 and sell it today you would lose (160.00) from holding National Atomic Co or give up 4.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

National Atomic Co  vs.  Alliance Data Systems

National Atomic

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Atomic Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, National Atomic is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Alliance Data Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alliance Data Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Atomic and Alliance Data

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

The idea behind National Atomic Co and Alliance Data Systems 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.