Correlation Between Alliance Data and Phoenix Group

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

By analyzing existing cross correlation between Alliance Data Systems and Phoenix Group Holdings, you can compare the effects of market volatilities on Alliance Data and Phoenix Group 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 Alliance Data with a short position of Phoenix Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and Phoenix Group.

Diversification Opportunities for Alliance Data and Phoenix Group

0.74

Correlation Coefficient

Alliance Data  Phoenix Group

Poor diversification

The 3 months correlation between Alliance and Phoenix is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and Phoenix Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Group Holdings and Alliance Data 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 Alliance Data Systems are associated (or correlated) with Phoenix Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Group Holdings has no effect on the direction of Alliance Data i.e., Alliance Data and Phoenix Group go up and down completely randomly.

Pair Corralation between Alliance Data and Phoenix Group

Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 2.38 times more return on investment than Phoenix Group. However, Alliance Data is 2.38 times more volatile than Phoenix Group Holdings. It trades about 0.19 of its potential returns per unit of risk. Phoenix Group Holdings is currently generating about 0.19 per unit of risk. If you would invest  4,812  in Alliance Data Systems on April 24, 2025 and sell it today you would earn a total of  1,236  from holding Alliance Data Systems or generate 25.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.71%
Values	Daily Returns

Alliance Data Systems  vs.  Phoenix Group Holdings

Alliance Data Systems

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Data Systems are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Alliance Data unveiled solid returns over the last few months and may actually be approaching a breakup point.

Phoenix Group Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Phoenix Group Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Phoenix Group may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Alliance Data and Phoenix Group

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

The idea behind Alliance Data Systems and Phoenix Group Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.