Correlation Between Alta Equipment and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Coca Cola 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 Coca Cola 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 The Coca Cola, you can compare the effects of market volatilities on Alta Equipment and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Coca Cola.
Diversification Opportunities for Alta Equipment and Coca Cola
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alta and Coca is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Alta Equipment i.e., Alta Equipment and Coca Cola go up and down completely randomly.
Pair Corralation between Alta Equipment and Coca Cola
Given the investment horizon of 90 days Alta Equipment Group is expected to generate 2.95 times more return on investment than Coca Cola. However, Alta Equipment is 2.95 times more volatile than The Coca Cola. It trades about 0.21 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.12 per unit of risk. If you would invest 649.00 in Alta Equipment Group on November 9, 2024 and sell it today you would earn a total of 97.00 from holding Alta Equipment Group or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. The Coca Cola
Performance |
| Timeline |
| Alta Equipment Group |
| Coca Cola |
Alta Equipment and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Coca Cola
The main advantage of trading using opposite Alta Equipment and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
| Coca Cola vs. Great Western Minerals | Coca Cola vs. Enterprise Bancorp | Coca Cola vs. T Rowe Price | Coca Cola vs. Aviat Networks |
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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