Correlation Between Alta Equipment and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Emerson Radio 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 Emerson Radio 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 Emerson Radio, you can compare the effects of market volatilities on Alta Equipment and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Emerson Radio.
Diversification Opportunities for Alta Equipment and Emerson Radio
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alta and Emerson is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Alta Equipment i.e., Alta Equipment and Emerson Radio go up and down completely randomly.
Pair Corralation between Alta Equipment and Emerson Radio
Given the investment horizon of 90 days Alta Equipment Group is expected to generate 1.11 times more return on investment than Emerson Radio. However, Alta Equipment is 1.11 times more volatile than Emerson Radio. It trades about 0.02 of its potential returns per unit of risk. Emerson Radio is currently generating about -0.04 per unit of risk. If you would invest 782.00 in Alta Equipment Group on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Alta Equipment Group or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. Emerson Radio
Performance |
| Timeline |
| Alta Equipment Group |
| Emerson Radio |
Alta Equipment and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Emerson Radio
The main advantage of trading using opposite Alta Equipment and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Herc Holdings | Alta Equipment vs. PROG Holdings | Alta Equipment vs. Custom Truck One |
| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Vizio Holding Corp | Emerson Radio vs. Turtle Beach Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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