Correlation Between Alta Equipment and Universal Music
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Universal Music 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 Universal Music 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 Universal Music Group, you can compare the effects of market volatilities on Alta Equipment and Universal Music 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 Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Universal Music.
Diversification Opportunities for Alta Equipment and Universal Music
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alta and Universal is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Universal Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Music Group 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 Universal Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Music Group has no effect on the direction of Alta Equipment i.e., Alta Equipment and Universal Music go up and down completely randomly.
Pair Corralation between Alta Equipment and Universal Music
Given the investment horizon of 90 days Alta Equipment is expected to generate 1.03 times less return on investment than Universal Music. In addition to that, Alta Equipment is 1.74 times more volatile than Universal Music Group. It trades about 0.18 of its total potential returns per unit of risk. Universal Music Group is currently generating about 0.32 per unit of volatility. If you would invest 1,248 in Universal Music Group on November 3, 2024 and sell it today you would earn a total of 150.00 from holding Universal Music Group or generate 12.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Alta Equipment Group vs. Universal Music Group
Performance |
| Timeline |
| Alta Equipment Group |
| Universal Music Group |
Alta Equipment and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Universal Music
The main advantage of trading using opposite Alta Equipment and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Universal Music 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 Universal Music will offset losses from the drop in Universal Music's long position.| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
| Universal Music vs. New Wave Holdings | Universal Music vs. Guild Esports Plc | Universal Music vs. Celtic plc | Universal Music vs. OverActive Media Corp |
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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