Correlation Between Gold Bullion and Ally Financial

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

By analyzing existing cross correlation between Gold Bullion Securities and Ally Financial, you can compare the effects of market volatilities on Gold Bullion and Ally Financial 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 Gold Bullion with a short position of Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Bullion and Ally Financial.

Diversification Opportunities for Gold Bullion and Ally Financial

0.41

Correlation Coefficient

Gold Bullion  Ally Financial

Very weak diversification

The 3 months correlation between Gold and Ally is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Gold Bullion Securities and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial and Gold Bullion 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 Gold Bullion Securities are associated (or correlated) with Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of Gold Bullion i.e., Gold Bullion and Ally Financial go up and down completely randomly.

Pair Corralation between Gold Bullion and Ally Financial

Assuming the 90 days trading horizon Gold Bullion is expected to generate 1.31 times less return on investment than Ally Financial. But when comparing it to its historical volatility, Gold Bullion Securities is 1.01 times less risky than Ally Financial. It trades about 0.04 of its potential returns per unit of risk. Ally Financial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,258  in Ally Financial on September 23, 2024 and sell it today you would earn a total of  1,256  from holding Ally Financial or generate 55.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Gold Bullion Securities  vs.  Ally Financial

Gold Bullion Securities

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Bullion Securities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Gold Bullion is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ally Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ally Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ally Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gold Bullion and Ally Financial

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

The idea behind Gold Bullion Securities and Ally Financial 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.