Correlation Between SIDETRADE and Allstate

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

By analyzing existing cross correlation between SIDETRADE EO 1 and The Allstate, you can compare the effects of market volatilities on SIDETRADE and Allstate 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 SIDETRADE with a short position of Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIDETRADE and Allstate.

Diversification Opportunities for SIDETRADE and Allstate

0.22

Correlation Coefficient

SIDETRADE  Allstate

Modest diversification

The 3 months correlation between SIDETRADE and Allstate is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SIDETRADE EO 1 and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and SIDETRADE 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 SIDETRADE EO 1 are associated (or correlated) with Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of SIDETRADE i.e., SIDETRADE and Allstate go up and down completely randomly.

Pair Corralation between SIDETRADE and Allstate

Assuming the 90 days horizon SIDETRADE EO 1 is expected to generate 1.33 times more return on investment than Allstate. However, SIDETRADE is 1.33 times more volatile than The Allstate. It trades about 0.12 of its potential returns per unit of risk. The Allstate is currently generating about 0.03 per unit of risk. If you would invest  21,200  in SIDETRADE EO 1 on April 20, 2025 and sell it today you would earn a total of  3,200  from holding SIDETRADE EO 1 or generate 15.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

SIDETRADE EO 1  vs.  The Allstate

SIDETRADE EO 1

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIDETRADE EO 1 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SIDETRADE reported solid returns over the last few months and may actually be approaching a breakup point.

Allstate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Allstate is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SIDETRADE and Allstate

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

The idea behind SIDETRADE EO 1 and The Allstate 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.