Correlation Between Alta Equipment and Electrovaya Common
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Electrovaya Common 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 Electrovaya Common 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 Electrovaya Common Shares, you can compare the effects of market volatilities on Alta Equipment and Electrovaya Common 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 Electrovaya Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Electrovaya Common.
Diversification Opportunities for Alta Equipment and Electrovaya Common
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alta and Electrovaya is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares 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 Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Alta Equipment i.e., Alta Equipment and Electrovaya Common go up and down completely randomly.
Pair Corralation between Alta Equipment and Electrovaya Common
Given the investment horizon of 90 days Alta Equipment is expected to generate 1.57 times less return on investment than Electrovaya Common. In addition to that, Alta Equipment is 1.07 times more volatile than Electrovaya Common Shares. It trades about 0.17 of its total potential returns per unit of risk. Electrovaya Common Shares is currently generating about 0.28 per unit of volatility. If you would invest 210.00 in Electrovaya Common Shares on September 5, 2024 and sell it today you would earn a total of 66.00 from holding Electrovaya Common Shares or generate 31.43% 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. Electrovaya Common Shares
Performance |
| Timeline |
| Alta Equipment Group |
| Electrovaya Common Shares |
Alta Equipment and Electrovaya Common Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Electrovaya Common
The main advantage of trading using opposite Alta Equipment and Electrovaya Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Electrovaya Common 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 Electrovaya Common will offset losses from the drop in Electrovaya Common's long position.| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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