Correlation Between Livermore Investments and Alliance Data

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

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

Diversification Opportunities for Livermore Investments and Alliance Data

-0.73

Correlation Coefficient

Livermore Investments  Alliance Data

Pay attention - limited upside

The 3 months correlation between Livermore and Alliance is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments Group 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 Livermore Investments 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 Livermore Investments Group 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 Livermore Investments i.e., Livermore Investments and Alliance Data go up and down completely randomly.

Pair Corralation between Livermore Investments and Alliance Data

Assuming the 90 days trading horizon Livermore Investments Group is expected to generate 0.83 times more return on investment than Alliance Data. However, Livermore Investments Group is 1.2 times less risky than Alliance Data. It trades about 0.22 of its potential returns per unit of risk. Alliance Data Systems is currently generating about -0.09 per unit of risk. If you would invest  5,000  in Livermore Investments Group on December 26, 2024 and sell it today you would earn a total of  1,950  from holding Livermore Investments Group or generate 39.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

Livermore Investments Group  vs.  Alliance Data Systems

Livermore Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Livermore Investments Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Livermore Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 Livermore Investments and Alliance Data

The main advantage of trading using opposite Livermore Investments and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livermore Investments 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 Livermore Investments Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.