Correlation Between Alta Equipment and Costamare
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Costamare 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 Costamare 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 Costamare, you can compare the effects of market volatilities on Alta Equipment and Costamare 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 Costamare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Costamare.
Diversification Opportunities for Alta Equipment and Costamare
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alta and Costamare is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Costamare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costamare 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 Costamare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costamare has no effect on the direction of Alta Equipment i.e., Alta Equipment and Costamare go up and down completely randomly.
Pair Corralation between Alta Equipment and Costamare
Assuming the 90 days trading horizon Alta Equipment is expected to generate 1.01 times less return on investment than Costamare. In addition to that, Alta Equipment is 1.14 times more volatile than Costamare. It trades about 0.05 of its total potential returns per unit of risk. Costamare is currently generating about 0.06 per unit of volatility. If you would invest 2,210 in Costamare on August 31, 2024 and sell it today you would earn a total of 355.00 from holding Costamare or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.93% |
| Values | Daily Returns |
Alta Equipment Group vs. Costamare
Performance |
| Timeline |
| Alta Equipment Group |
| Costamare |
Alta Equipment and Costamare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Costamare
The main advantage of trading using opposite Alta Equipment and Costamare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Costamare 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 Costamare will offset losses from the drop in Costamare'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 |
| Costamare vs. Safe Bulkers | Costamare vs. Safe Bulkers | Costamare vs. Diana Shipping | Costamare vs. Global Ship Lease |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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