Correlation Between Allan Gray and Analytics

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

By analyzing existing cross correlation between Allan Gray Equity and Analytics Ci Balanced, you can compare the effects of market volatilities on Allan Gray and Analytics 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 Allan Gray with a short position of Analytics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allan Gray and Analytics.

Diversification Opportunities for Allan Gray and Analytics

0.81

Correlation Coefficient

Allan Gray  Analytics

Very poor diversification

The 3 months correlation between Allan and Analytics is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Allan Gray Equity and Analytics Ci Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analytics Ci Balanced and Allan Gray 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 Allan Gray Equity are associated (or correlated) with Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analytics Ci Balanced has no effect on the direction of Allan Gray i.e., Allan Gray and Analytics go up and down completely randomly.

Pair Corralation between Allan Gray and Analytics

Assuming the 90 days trading horizon Allan Gray Equity is expected to generate 1.37 times more return on investment than Analytics. However, Allan Gray is 1.37 times more volatile than Analytics Ci Balanced. It trades about 0.17 of its potential returns per unit of risk. Analytics Ci Balanced is currently generating about 0.23 per unit of risk. If you would invest  58,191  in Allan Gray Equity on September 11, 2024 and sell it today you would earn a total of  2,930  from holding Allan Gray Equity or generate 5.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Allan Gray Equity  vs.  Analytics Ci Balanced

Allan Gray Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allan Gray Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Allan Gray is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Analytics Ci Balanced

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Analytics Ci Balanced are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Analytics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allan Gray and Analytics

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

The idea behind Allan Gray Equity and Analytics Ci Balanced 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.