Correlation Between Alta Equipment and Net Lease
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Net Lease 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 Net Lease 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 Net Lease Office, you can compare the effects of market volatilities on Alta Equipment and Net Lease 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 Net Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Net Lease.
Diversification Opportunities for Alta Equipment and Net Lease
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alta and Net is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Net Lease Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Net Lease Office 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 Net Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Net Lease Office has no effect on the direction of Alta Equipment i.e., Alta Equipment and Net Lease go up and down completely randomly.
Pair Corralation between Alta Equipment and Net Lease
Given the investment horizon of 90 days Alta Equipment Group is expected to generate 1.62 times more return on investment than Net Lease. However, Alta Equipment is 1.62 times more volatile than Net Lease Office. It trades about 0.12 of its potential returns per unit of risk. Net Lease Office is currently generating about 0.16 per unit of risk. If you would invest 685.00 in Alta Equipment Group on November 7, 2024 and sell it today you would earn a total of 45.00 from holding Alta Equipment Group or generate 6.57% 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. Net Lease Office
Performance |
| Timeline |
| Alta Equipment Group |
| Net Lease Office |
Alta Equipment and Net Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Net Lease
The main advantage of trading using opposite Alta Equipment and Net Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Net Lease 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 Net Lease will offset losses from the drop in Net Lease's long position.| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
| Net Lease vs. SBM Offshore NV | Net Lease vs. Astral Foods Limited | Net Lease vs. Ironveld Plc | Net Lease vs. Tyson Foods |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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