Correlation Between Alamo and GreenPower
Can any of the company-specific risk be diversified away by investing in both Alamo and GreenPower 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 GreenPower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamo Group and GreenPower Motor, you can compare the effects of market volatilities on Alamo and GreenPower 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 GreenPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and GreenPower.
Diversification Opportunities for Alamo and GreenPower
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alamo and GreenPower is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and GreenPower Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenPower Motor 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 GreenPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenPower Motor has no effect on the direction of Alamo i.e., Alamo and GreenPower go up and down completely randomly.
Pair Corralation between Alamo and GreenPower
Considering the 90-day investment horizon Alamo Group is expected to generate 0.34 times more return on investment than GreenPower. However, Alamo Group is 2.98 times less risky than GreenPower. It trades about 0.04 of its potential returns per unit of risk. GreenPower Motor is currently generating about -0.01 per unit of risk. If you would invest 14,772 in Alamo Group on August 24, 2024 and sell it today you would earn a total of 5,038 from holding Alamo Group or generate 34.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alamo Group vs. GreenPower Motor
Performance |
| Timeline |
| Alamo Group |
| GreenPower Motor |
Alamo and GreenPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alamo and GreenPower
The main advantage of trading using opposite Alamo and GreenPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo position performs unexpectedly, GreenPower 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 GreenPower will offset losses from the drop in GreenPower's long position.| Alamo vs. Hyster Yale Materials Handling | Alamo vs. Columbus McKinnon | Alamo vs. AGCO Corporation | Alamo vs. Titan International |
| GreenPower vs. Phoenix Motor Common | GreenPower vs. Envirotech Vehicles | GreenPower vs. Volcon Inc | GreenPower vs. Zapp Electric Vehicles |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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