Correlation Between FirstCash and Allstate
Can any of the company-specific risk be diversified away by investing in both FirstCash 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 FirstCash and Allstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstCash and The Allstate, you can compare the effects of market volatilities on FirstCash 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 FirstCash with a short position of Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstCash and Allstate.
Diversification Opportunities for FirstCash and Allstate
Very poor diversification
The 3 months correlation between FirstCash and Allstate is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and FirstCash 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 FirstCash 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 FirstCash i.e., FirstCash and Allstate go up and down completely randomly.
Pair Corralation between FirstCash and Allstate
Given the investment horizon of 90 days FirstCash is expected to generate 1.0 times more return on investment than Allstate. However, FirstCash is 1.0 times less risky than Allstate. It trades about 0.37 of its potential returns per unit of risk. The Allstate is currently generating about 0.08 per unit of risk. If you would invest 11,746 in FirstCash on January 19, 2024 and sell it today you would earn a total of 1,255 from holding FirstCash or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstCash vs. The Allstate
Performance |
| Timeline |
| FirstCash |
| Allstate |
FirstCash and Allstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstCash and Allstate
The main advantage of trading using opposite FirstCash and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstCash 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.| FirstCash vs. Orix Corp Ads | FirstCash vs. SLM Corp | FirstCash vs. Navient Corp | FirstCash vs. Enova International |
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 Stocks Directory module to find actively traded stocks across global markets.
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