Correlation Between Alta Equipment and X3 Holdings
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and X3 Holdings 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 X3 Holdings 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 X3 Holdings Co, you can compare the effects of market volatilities on Alta Equipment and X3 Holdings 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 X3 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and X3 Holdings.
Diversification Opportunities for Alta Equipment and X3 Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alta and XTKG is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and X3 Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X3 Holdings 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 X3 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X3 Holdings has no effect on the direction of Alta Equipment i.e., Alta Equipment and X3 Holdings go up and down completely randomly.
Pair Corralation between Alta Equipment and X3 Holdings
Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the X3 Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Alta Equipment Group is 16.02 times less risky than X3 Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The X3 Holdings Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 104.00 in X3 Holdings Co on October 24, 2024 and sell it today you would lose (5.10) from holding X3 Holdings Co or give up 4.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. X3 Holdings Co
Performance |
| Timeline |
| Alta Equipment Group |
| X3 Holdings |
Alta Equipment and X3 Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and X3 Holdings
The main advantage of trading using opposite Alta Equipment and X3 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, X3 Holdings 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 X3 Holdings will offset losses from the drop in X3 Holdings' long position.| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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