Correlation Between Alamo and Daimler Truck
Can any of the company-specific risk be diversified away by investing in both Alamo and Daimler Truck 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 Alamo and Daimler Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamo Group and Daimler Truck Holding, you can compare the effects of market volatilities on Alamo and Daimler Truck 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 Alamo with a short position of Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and Daimler Truck.
Diversification Opportunities for Alamo and Daimler Truck
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alamo and Daimler is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding and Alamo 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 Alamo Group are associated (or correlated) with Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of Alamo i.e., Alamo and Daimler Truck go up and down completely randomly.
Pair Corralation between Alamo and Daimler Truck
Considering the 90-day investment horizon Alamo Group is expected to generate 1.04 times more return on investment than Daimler Truck. However, Alamo is 1.04 times more volatile than Daimler Truck Holding. It trades about 0.04 of its potential returns per unit of risk. Daimler Truck Holding is currently generating about 0.04 per unit of risk. If you would invest 14,583 in Alamo Group on September 2, 2024 and sell it today you would earn a total of 5,412 from holding Alamo Group or generate 37.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alamo Group vs. Daimler Truck Holding
Performance |
| Timeline |
| Alamo Group |
| Daimler Truck Holding |
Alamo and Daimler Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alamo and Daimler Truck
The main advantage of trading using opposite Alamo and Daimler Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo position performs unexpectedly, Daimler Truck 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 Daimler Truck will offset losses from the drop in Daimler Truck's long position.| Alamo vs. Hyster Yale Materials Handling | Alamo vs. Columbus McKinnon | Alamo vs. AGCO Corporation | Alamo vs. Titan International |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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