Correlation Between Alta Equipment and Socket Mobile
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Socket Mobile 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 Socket Mobile 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 Socket Mobile, you can compare the effects of market volatilities on Alta Equipment and Socket Mobile 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 Socket Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Socket Mobile.
Diversification Opportunities for Alta Equipment and Socket Mobile
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alta and Socket is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Socket Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socket Mobile 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 Socket Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socket Mobile has no effect on the direction of Alta Equipment i.e., Alta Equipment and Socket Mobile go up and down completely randomly.
Pair Corralation between Alta Equipment and Socket Mobile
Given the investment horizon of 90 days Alta Equipment is expected to generate 1.75 times less return on investment than Socket Mobile. In addition to that, Alta Equipment is 1.34 times more volatile than Socket Mobile. It trades about 0.21 of its total potential returns per unit of risk. Socket Mobile is currently generating about 0.5 per unit of volatility. If you would invest 110.00 in Socket Mobile on September 1, 2024 and sell it today you would earn a total of 52.00 from holding Socket Mobile or generate 47.27% 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. Socket Mobile
Performance |
| Timeline |
| Alta Equipment Group |
| Socket Mobile |
Alta Equipment and Socket Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Socket Mobile
The main advantage of trading using opposite Alta Equipment and Socket Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Socket Mobile 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 Socket Mobile will offset losses from the drop in Socket Mobile's long position.| Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Herc Holdings | Alta Equipment vs. PROG Holdings | Alta Equipment vs. Custom Truck One |
| Socket Mobile vs. Cricut Inc | Socket Mobile vs. Nano Dimension | Socket Mobile vs. IONQ Inc | Socket Mobile vs. AGM Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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