Correlation Between Alta Equipment and Ashtead Gro
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Ashtead Gro 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 Gro 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 Gro, you can compare the effects of market volatilities on Alta Equipment and Ashtead Gro 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 Gro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Ashtead Gro.
Diversification Opportunities for Alta Equipment and Ashtead Gro
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alta and Ashtead is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Ashtead Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Gro 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 Gro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Gro has no effect on the direction of Alta Equipment i.e., Alta Equipment and Ashtead Gro go up and down completely randomly.
Pair Corralation between Alta Equipment and Ashtead Gro
Given the investment horizon of 90 days Alta Equipment is expected to generate 3.81 times less return on investment than Ashtead Gro. In addition to that, Alta Equipment is 1.95 times more volatile than Ashtead Gro. It trades about 0.01 of its total potential returns per unit of risk. Ashtead Gro is currently generating about 0.07 per unit of volatility. If you would invest 23,733 in Ashtead Gro on August 26, 2024 and sell it today you would earn a total of 8,629 from holding Ashtead Gro or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. Ashtead Gro
Performance |
| Timeline |
| Alta Equipment Group |
| Ashtead Gro |
Alta Equipment and Ashtead Gro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Ashtead Gro
The main advantage of trading using opposite Alta Equipment and Ashtead Gro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Ashtead Gro 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 Gro will offset losses from the drop in Ashtead Gro's long position.| Alta Equipment vs. PROG Holdings | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Mega Matrix Corp | Alta Equipment vs. FTAI Aviation Ltd |
| Ashtead Gro vs. African Discovery Group | Ashtead Gro vs. BOC Aviation Limited | Ashtead Gro vs. Black Diamond Group | Ashtead Gro vs. Alta Equipment Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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