Correlation Between Paysafe and Alleghany

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

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

Diversification Opportunities for Paysafe and Alleghany

0.25

Correlation Coefficient

Paysafe  Alleghany

Modest diversification

The 3 months correlation between Paysafe and Alleghany is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe and Alleghany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alleghany and Paysafe 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 Paysafe are associated (or correlated) with Alleghany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alleghany has no effect on the direction of Paysafe i.e., Paysafe and Alleghany go up and down completely randomly.

Pair Corralation between Paysafe and Alleghany

Given the investment horizon of 90 days Paysafe is expected to generate 1.57 times less return on investment than Alleghany. In addition to that, Paysafe is 16.46 times more volatile than Alleghany. It trades about 0.01 of its total potential returns per unit of risk. Alleghany is currently generating about 0.38 per unit of volatility. If you would invest  84,200  in Alleghany on February 3, 2024 and sell it today you would earn a total of  579.00  from holding Alleghany or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.79%
Values	Daily Returns

Paysafe  vs.  Alleghany

Paysafe

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Paysafe are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Paysafe may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Alleghany

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alleghany has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Alleghany is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Paysafe and Alleghany

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

The idea behind Paysafe and Alleghany 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.