Correlation Between Alta Equipment and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Ashtead Group 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 Alta Equipment and Ashtead Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alta Equipment Group and Ashtead Group plc, you can compare the effects of market volatilities on Alta Equipment and Ashtead Group 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 Alta Equipment with a short position of Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Ashtead Group.
Diversification Opportunities for Alta Equipment and Ashtead Group
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alta and Ashtead is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Ashtead Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group plc and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group plc has no effect on the direction of Alta Equipment i.e., Alta Equipment and Ashtead Group go up and down completely randomly.
Pair Corralation between Alta Equipment and Ashtead Group
Assuming the 90 days trading horizon Alta Equipment Group is expected to generate 0.63 times more return on investment than Ashtead Group. However, Alta Equipment Group is 1.59 times less risky than Ashtead Group. It trades about 0.03 of its potential returns per unit of risk. Ashtead Group plc is currently generating about 0.01 per unit of risk. If you would invest 2,113 in Alta Equipment Group on October 21, 2024 and sell it today you would earn a total of 451.00 from holding Alta Equipment Group or generate 21.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Alta Equipment Group vs. Ashtead Group plc
Performance |
| Timeline |
| Alta Equipment Group |
| Ashtead Group plc |
Alta Equipment and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Ashtead Group
The main advantage of trading using opposite Alta Equipment and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Ashtead Group 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.| Alta Equipment vs. Triton International Limited | Alta Equipment vs. Babcock Wilcox Enterprises | Alta Equipment vs. Triton International Limited | Alta Equipment vs. Triton International Limited |
| Ashtead Group vs. African Discovery Group | Ashtead Group vs. Emeco Holdings Limited | Ashtead Group vs. Solution Financial | Ashtead Group vs. BOC Aviation Limited |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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