Correlation Between Alta Equipment and Solution Financial
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Solution Financial 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 Solution Financial 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 Solution Financial, you can compare the effects of market volatilities on Alta Equipment and Solution Financial 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 Solution Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Solution Financial.
Diversification Opportunities for Alta Equipment and Solution Financial
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alta and Solution is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Solution Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Financial 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 Solution Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Financial has no effect on the direction of Alta Equipment i.e., Alta Equipment and Solution Financial go up and down completely randomly.
Pair Corralation between Alta Equipment and Solution Financial
Assuming the 90 days trading horizon Alta Equipment Group is expected to generate 0.16 times more return on investment than Solution Financial. However, Alta Equipment Group is 6.11 times less risky than Solution Financial. It trades about -0.01 of its potential returns per unit of risk. Solution Financial is currently generating about -0.07 per unit of risk. If you would invest 2,550 in Alta Equipment Group on August 28, 2024 and sell it today you would lose (3.00) from holding Alta Equipment Group or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. Solution Financial
Performance |
| Timeline |
| Alta Equipment Group |
| Solution Financial |
Alta Equipment and Solution Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Solution Financial
The main advantage of trading using opposite Alta Equipment and Solution Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Solution Financial 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 Solution Financial will offset losses from the drop in Solution Financial'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 |
| Solution Financial vs. Ashtead Group plc | Solution Financial vs. African Discovery Group | Solution Financial vs. Emeco Holdings Limited | Solution Financial 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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