Correlation Between ALLSTATE and Alignment Healthcare

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

By analyzing existing cross correlation between ALLSTATE P 535 and Alignment Healthcare LLC, you can compare the effects of market volatilities on ALLSTATE and Alignment Healthcare 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 ALLSTATE with a short position of Alignment Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLSTATE and Alignment Healthcare.

Diversification Opportunities for ALLSTATE and Alignment Healthcare

-0.18

Correlation Coefficient

ALLSTATE  Alignment Healthcare

Good diversification

The 3 months correlation between ALLSTATE and Alignment is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ALLSTATE P 535 and Alignment Healthcare LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare LLC and ALLSTATE 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 ALLSTATE P 535 are associated (or correlated) with Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare LLC has no effect on the direction of ALLSTATE i.e., ALLSTATE and Alignment Healthcare go up and down completely randomly.

Pair Corralation between ALLSTATE and Alignment Healthcare

Assuming the 90 days trading horizon ALLSTATE P 535 is expected to under-perform the Alignment Healthcare. But the bond apears to be less risky and, when comparing its historical volatility, ALLSTATE P 535 is 4.2 times less risky than Alignment Healthcare. The bond trades about 0.0 of its potential returns per unit of risk. The Alignment Healthcare LLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,172  in Alignment Healthcare LLC on October 8, 2024 and sell it today you would lose (2.00) from holding Alignment Healthcare LLC or give up 0.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.26%
Values	Daily Returns

ALLSTATE P 535  vs.  Alignment Healthcare LLC

ALLSTATE P 535

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLSTATE P 535 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alignment Healthcare LLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alignment Healthcare LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Alignment Healthcare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ALLSTATE and Alignment Healthcare

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

The idea behind ALLSTATE P 535 and Alignment Healthcare LLC 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.