Correlation Between Alamo and First Tractor
Can any of the company-specific risk be diversified away by investing in both Alamo and First Tractor 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 First Tractor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamo Group and First Tractor, you can compare the effects of market volatilities on Alamo and First Tractor 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 First Tractor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and First Tractor.
Diversification Opportunities for Alamo and First Tractor
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alamo and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and First Tractor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Tractor 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 First Tractor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Tractor has no effect on the direction of Alamo i.e., Alamo and First Tractor go up and down completely randomly.
Pair Corralation between Alamo and First Tractor
If you would invest 17,346 in Alamo Group on August 30, 2024 and sell it today you would earn a total of 2,443 from holding Alamo Group or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alamo Group vs. First Tractor
Performance |
| Timeline |
| Alamo Group |
| First Tractor |
Alamo and First Tractor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alamo and First Tractor
The main advantage of trading using opposite Alamo and First Tractor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo position performs unexpectedly, First Tractor 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 First Tractor will offset losses from the drop in First Tractor's long position.The idea behind Alamo Group and First Tractor 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.| First Tractor vs. Ag Growth International | First Tractor vs. AmeraMex International | First Tractor vs. Arts Way Manufacturing Co | First Tractor vs. American Premium Water |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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