Correlation Between First Acceptance and Allstate

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

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

Diversification Opportunities for First Acceptance and Allstate

-0.64

Correlation Coefficient

First Acceptance  Allstate

Excellent diversification

The 3 months correlation between First and Allstate is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Acceptance Corp and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and First Acceptance 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 First Acceptance Corp 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 First Acceptance i.e., First Acceptance and Allstate go up and down completely randomly.

Pair Corralation between First Acceptance and Allstate

If you would invest  80.00  in First Acceptance Corp on January 28, 2024 and sell it today you would earn a total of  0.00  from holding First Acceptance Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

First Acceptance Corp  vs.  The Allstate

First Acceptance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Acceptance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, First Acceptance is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Allstate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Allstate may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with First Acceptance and Allstate

The main advantage of trading using opposite First Acceptance and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Acceptance 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 First Acceptance Corp 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..