Correlation Between Allstate and United Community

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

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

Diversification Opportunities for Allstate and United Community

0.59

Correlation Coefficient

Allstate  United Community

Very weak diversification

The 3 months correlation between Allstate and United is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Allstate and United Community Banks, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Community Banks, and Allstate 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 The Allstate are associated (or correlated) with United Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Community Banks, has no effect on the direction of Allstate i.e., Allstate and United Community go up and down completely randomly.

Pair Corralation between Allstate and United Community

Assuming the 90 days trading horizon Allstate is expected to generate 2.16 times less return on investment than United Community. But when comparing it to its historical volatility, The Allstate is 3.32 times less risky than United Community. It trades about 0.14 of its potential returns per unit of risk. United Community Banks, is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,762  in United Community Banks, on May 6, 2025 and sell it today you would earn a total of  229.00  from holding United Community Banks, or generate 8.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

The Allstate  vs.  United Community Banks,

Allstate

Risk-Adjusted Performance

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. Even with relatively steady essential indicators, Allstate is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

United Community Banks,

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Community Banks, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, United Community may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Allstate and United Community

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

The idea behind The Allstate and United Community Banks, 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.