Correlation Between Alta Equipment and Nike
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on Alta Equipment and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Nike.
Diversification Opportunities for Alta Equipment and Nike
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alta and Nike is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Alta Equipment i.e., Alta Equipment and Nike go up and down completely randomly.
Pair Corralation between Alta Equipment and Nike
Given the investment horizon of 90 days Alta Equipment Group is expected to generate 3.18 times more return on investment than Nike. However, Alta Equipment is 3.18 times more volatile than Nike Inc. It trades about 0.21 of its potential returns per unit of risk. Nike Inc is currently generating about 0.07 per unit of risk. If you would invest 645.00 in Alta Equipment Group on September 1, 2024 and sell it today you would earn a total of 146.00 from holding Alta Equipment Group or generate 22.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. Nike Inc
Performance |
| Timeline |
| Alta Equipment Group |
| Nike Inc |
Alta Equipment and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Nike
The main advantage of trading using opposite Alta Equipment and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Herc Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. PROG Holdings |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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