Correlation Between Alta Equipment and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and BBB Foods 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 BBB Foods 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 BBB Foods, you can compare the effects of market volatilities on Alta Equipment and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and BBB Foods.
Diversification Opportunities for Alta Equipment and BBB Foods
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alta and BBB is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Alta Equipment i.e., Alta Equipment and BBB Foods go up and down completely randomly.
Pair Corralation between Alta Equipment and BBB Foods
Given the investment horizon of 90 days Alta Equipment Group is expected to generate 3.03 times more return on investment than BBB Foods. However, Alta Equipment is 3.03 times more volatile than BBB Foods. It trades about 0.21 of its potential returns per unit of risk. BBB Foods is currently generating about 0.0 per unit of risk. If you would invest 665.00 in Alta Equipment Group on August 27, 2024 and sell it today you would earn a total of 147.00 from holding Alta Equipment Group or generate 22.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. BBB Foods
Performance |
| Timeline |
| Alta Equipment Group |
| BBB Foods |
Alta Equipment and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and BBB Foods
The main advantage of trading using opposite Alta Equipment and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Alta Equipment vs. PROG Holdings | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Mega Matrix Corp | Alta Equipment vs. FTAI Aviation Ltd |
| BBB Foods vs. Kaltura | BBB Foods vs. Analog Devices | BBB Foods vs. Sabra Healthcare REIT | BBB Foods vs. Amkor Technology |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |