Correlation Between Alta Equipment and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Regions Financial 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 Regions Financial 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 Regions Financial, you can compare the effects of market volatilities on Alta Equipment and Regions Financial 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 Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Regions Financial.
Diversification Opportunities for Alta Equipment and Regions Financial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alta and Regions is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial 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 Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial has no effect on the direction of Alta Equipment i.e., Alta Equipment and Regions Financial go up and down completely randomly.
Pair Corralation between Alta Equipment and Regions Financial
Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the Regions Financial. In addition to that, Alta Equipment is 3.83 times more volatile than Regions Financial. It trades about -0.02 of its total potential returns per unit of risk. Regions Financial is currently generating about 0.03 per unit of volatility. If you would invest 1,708 in Regions Financial on November 8, 2024 and sell it today you would earn a total of 104.00 from holding Regions Financial or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. Regions Financial
Performance |
| Timeline |
| Alta Equipment Group |
| Regions Financial |
Alta Equipment and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Regions Financial
The main advantage of trading using opposite Alta Equipment and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Regions Financial 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 Regions Financial will offset losses from the drop in Regions Financial's long position.| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
| Regions Financial vs. Sphere Entertainment Co | Regions Financial vs. Coty Inc | Regions Financial vs. Sun Country Airlines | Regions Financial vs. NETGEAR |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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