Correlation Between ALLSTATE and Vita Coco

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Can any of the company-specific risk be diversified away by investing in both ALLSTATE and Vita Coco 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 Vita Coco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALLSTATE P 45 and Vita Coco, you can compare the effects of market volatilities on ALLSTATE and Vita Coco 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 Vita Coco. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLSTATE and Vita Coco.

Diversification Opportunities for ALLSTATE and Vita Coco

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between ALLSTATE and Vita is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ALLSTATE P 45 and Vita Coco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vita Coco 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 45 are associated (or correlated) with Vita Coco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vita Coco has no effect on the direction of ALLSTATE i.e., ALLSTATE and Vita Coco go up and down completely randomly.

Pair Corralation between ALLSTATE and Vita Coco

Assuming the 90 days trading horizon ALLSTATE is expected to generate 1.95 times less return on investment than Vita Coco. In addition to that, ALLSTATE is 1.18 times more volatile than Vita Coco. It trades about 0.07 of its total potential returns per unit of risk. Vita Coco is currently generating about 0.15 per unit of volatility. If you would invest  2,822  in Vita Coco on October 9, 2024 and sell it today you would earn a total of  599.00  from holding Vita Coco or generate 21.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy62.9%
ValuesDaily Returns

ALLSTATE P 45  vs.  Vita Coco

 Performance 
       Timeline  
ALLSTATE P 45 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in ALLSTATE P 45 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ALLSTATE may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Vita Coco 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

ALLSTATE and Vita Coco Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ALLSTATE and Vita Coco

The main advantage of trading using opposite ALLSTATE and Vita Coco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALLSTATE position performs unexpectedly, Vita Coco 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 Vita Coco will offset losses from the drop in Vita Coco's long position.
The idea behind ALLSTATE P 45 and Vita Coco 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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