Correlation Between ALLSTATE and Inter Parfums

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

By analyzing existing cross correlation between ALLSTATE P 555 and Inter Parfums, you can compare the effects of market volatilities on ALLSTATE and Inter Parfums 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 Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLSTATE and Inter Parfums.

Diversification Opportunities for ALLSTATE and Inter Parfums

-0.07

Correlation Coefficient

ALLSTATE  Inter Parfums

Good diversification

The 3 months correlation between ALLSTATE and Inter is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding ALLSTATE P 555 and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums 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 555 are associated (or correlated) with Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of ALLSTATE i.e., ALLSTATE and Inter Parfums go up and down completely randomly.

Pair Corralation between ALLSTATE and Inter Parfums

Assuming the 90 days trading horizon ALLSTATE is expected to generate 2.73 times less return on investment than Inter Parfums. But when comparing it to its historical volatility, ALLSTATE P 555 is 1.38 times less risky than Inter Parfums. It trades about 0.04 of its potential returns per unit of risk. Inter Parfums is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12,084  in Inter Parfums on October 8, 2024 and sell it today you would earn a total of  922.00  from holding Inter Parfums or generate 7.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.1%
Values	Daily Returns

ALLSTATE P 555  vs.  Inter Parfums

ALLSTATE P 555

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ALLSTATE P 555 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Inter Parfums

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Parfums are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Inter Parfums may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ALLSTATE and Inter Parfums

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

The idea behind ALLSTATE P 555 and Inter Parfums 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.