Correlation Between Alta Equipment and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and HE Equipment 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 HE Equipment 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 HE Equipment Services, you can compare the effects of market volatilities on Alta Equipment and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and HE Equipment.
Diversification Opportunities for Alta Equipment and HE Equipment
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alta and HEES is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Alta Equipment i.e., Alta Equipment and HE Equipment go up and down completely randomly.
Pair Corralation between Alta Equipment and HE Equipment
Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the HE Equipment. In addition to that, Alta Equipment is 1.33 times more volatile than HE Equipment Services. It trades about 0.0 of its total potential returns per unit of risk. HE Equipment Services is currently generating about 0.04 per unit of volatility. If you would invest 4,102 in HE Equipment Services on August 27, 2024 and sell it today you would earn a total of 1,774 from holding HE Equipment Services or generate 43.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. HE Equipment Services
Performance |
| Timeline |
| Alta Equipment Group |
| HE Equipment Services |
Alta Equipment and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and HE Equipment
The main advantage of trading using opposite Alta Equipment and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment'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 |
| HE Equipment vs. PROG Holdings | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Mega Matrix Corp | HE Equipment vs. FTAI Aviation Ltd |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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