Correlation Between 1847 Holdings and Allison Transmission

Can any of the company-specific risk be diversified away by investing in both 1847 Holdings and Allison Transmission 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 1847 Holdings and Allison Transmission into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1847 Holdings LLC and Allison Transmission Holdings, you can compare the effects of market volatilities on 1847 Holdings and Allison Transmission 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 1847 Holdings with a short position of Allison Transmission. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1847 Holdings and Allison Transmission.

Diversification Opportunities for 1847 Holdings and Allison Transmission

-0.75

Correlation Coefficient

1847 Holdings  Allison Transmission

Pay attention - limited upside

The 3 months correlation between 1847 and Allison is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding 1847 Holdings LLC and Allison Transmission Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allison Transmission and 1847 Holdings 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 1847 Holdings LLC are associated (or correlated) with Allison Transmission. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allison Transmission has no effect on the direction of 1847 Holdings i.e., 1847 Holdings and Allison Transmission go up and down completely randomly.

Pair Corralation between 1847 Holdings and Allison Transmission

Given the investment horizon of 90 days 1847 Holdings LLC is expected to under-perform the Allison Transmission. In addition to that, 1847 Holdings is 18.65 times more volatile than Allison Transmission Holdings. It trades about -0.07 of its total potential returns per unit of risk. Allison Transmission Holdings is currently generating about 0.11 per unit of volatility. If you would invest  9,586  in Allison Transmission Holdings on September 30, 2024 and sell it today you would earn a total of  1,288  from holding Allison Transmission Holdings or generate 13.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

1847 Holdings LLC  vs.  Allison Transmission Holdings

1847 Holdings LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1847 Holdings LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Allison Transmission

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allison Transmission Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Allison Transmission displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 1847 Holdings and Allison Transmission

The main advantage of trading using opposite 1847 Holdings and Allison Transmission positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1847 Holdings position performs unexpectedly, Allison Transmission 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 Allison Transmission will offset losses from the drop in Allison Transmission's long position.

The idea behind 1847 Holdings LLC and Allison Transmission Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.