Correlation Between Alamo and Terex
Can any of the company-specific risk be diversified away by investing in both Alamo and Terex 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 Terex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamo Group and Terex, you can compare the effects of market volatilities on Alamo and Terex 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 Terex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and Terex.
Diversification Opportunities for Alamo and Terex
Weak diversification
The 3 months correlation between Alamo and Terex is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Terex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terex 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 Terex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terex has no effect on the direction of Alamo i.e., Alamo and Terex go up and down completely randomly.
Pair Corralation between Alamo and Terex
Considering the 90-day investment horizon Alamo Group is expected to generate 0.82 times more return on investment than Terex. However, Alamo Group is 1.22 times less risky than Terex. It trades about 0.26 of its potential returns per unit of risk. Terex is currently generating about 0.02 per unit of risk. If you would invest 16,880 in Alamo Group on August 24, 2024 and sell it today you would earn a total of 2,756 from holding Alamo Group or generate 16.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alamo Group vs. Terex
Performance |
| Timeline |
| Alamo Group |
| Terex |
Alamo and Terex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alamo and Terex
The main advantage of trading using opposite Alamo and Terex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo position performs unexpectedly, Terex 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 Terex will offset losses from the drop in Terex's long position.| Alamo vs. Hyster Yale Materials Handling | Alamo vs. Columbus McKinnon | Alamo vs. AGCO Corporation | Alamo vs. Titan International |
| Terex vs. Oshkosh | Terex vs. Astec Industries | Terex vs. Hyster Yale Materials Handling | Terex vs. Manitex International |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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