Correlation Between ALLSTATE and Paysafe

Can any of the company-specific risk be diversified away by investing in both ALLSTATE and Paysafe 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 Paysafe 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 Paysafe, you can compare the effects of market volatilities on ALLSTATE and Paysafe 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 Paysafe. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLSTATE and Paysafe.

Diversification Opportunities for ALLSTATE and Paysafe

0.39

Correlation Coefficient

ALLSTATE  Paysafe

Weak diversification

The 3 months correlation between ALLSTATE and Paysafe is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ALLSTATE P 535 and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe 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 Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe has no effect on the direction of ALLSTATE i.e., ALLSTATE and Paysafe go up and down completely randomly.

Pair Corralation between ALLSTATE and Paysafe

Assuming the 90 days trading horizon ALLSTATE P 535 is expected to generate 0.15 times more return on investment than Paysafe. However, ALLSTATE P 535 is 6.49 times less risky than Paysafe. It trades about 0.06 of its potential returns per unit of risk. Paysafe is currently generating about -0.12 per unit of risk. If you would invest  10,127  in ALLSTATE P 535 on October 7, 2024 and sell it today you would earn a total of  139.00  from holding ALLSTATE P 535 or generate 1.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.05%
Values	Daily Returns

ALLSTATE P 535  vs.  Paysafe

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ALLSTATE and Paysafe

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

The idea behind ALLSTATE P 535 and Paysafe 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.