Correlation Between Aptiv PLC and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and Alta Equipment 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 Aptiv PLC and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Alta Equipment Group, you can compare the effects of market volatilities on Aptiv PLC and Alta Equipment 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 Aptiv PLC with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Alta Equipment.
Diversification Opportunities for Aptiv PLC and Alta Equipment
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aptiv and Alta is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Alta Equipment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Equipment Group and Aptiv PLC 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 Aptiv PLC are associated (or correlated) with Alta Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Equipment Group has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Alta Equipment go up and down completely randomly.
Pair Corralation between Aptiv PLC and Alta Equipment
Given the investment horizon of 90 days Aptiv PLC is expected to generate 1.5 times less return on investment than Alta Equipment. But when comparing it to its historical volatility, Aptiv PLC is 2.35 times less risky than Alta Equipment. It trades about 0.29 of its potential returns per unit of risk. Alta Equipment Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 660.00 in Alta Equipment Group on October 20, 2024 and sell it today you would earn a total of 69.00 from holding Alta Equipment Group or generate 10.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. Alta Equipment Group
Performance |
| Timeline |
| Aptiv PLC |
| Alta Equipment Group |
Aptiv PLC and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Alta Equipment
The main advantage of trading using opposite Aptiv PLC and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, Alta Equipment 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 Alta Equipment will offset losses from the drop in Alta Equipment's long position.| Aptiv PLC vs. Allison Transmission Holdings | Aptiv PLC vs. LKQ Corporation | Aptiv PLC vs. Lear Corporation | Aptiv PLC vs. Magna International |
| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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