Correlation Between Ashtead Group and Black Diamond
Can any of the company-specific risk be diversified away by investing in both Ashtead Group and Black Diamond 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 Ashtead Group and Black Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashtead Group plc and Black Diamond Group, you can compare the effects of market volatilities on Ashtead Group and Black Diamond 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 Ashtead Group with a short position of Black Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Group and Black Diamond.
Diversification Opportunities for Ashtead Group and Black Diamond
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashtead and Black is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Group plc and Black Diamond Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Diamond Group and Ashtead Group 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 Ashtead Group plc are associated (or correlated) with Black Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Diamond Group has no effect on the direction of Ashtead Group i.e., Ashtead Group and Black Diamond go up and down completely randomly.
Pair Corralation between Ashtead Group and Black Diamond
Assuming the 90 days horizon Ashtead Group is expected to generate 5.04 times less return on investment than Black Diamond. In addition to that, Ashtead Group is 1.18 times more volatile than Black Diamond Group. It trades about 0.01 of its total potential returns per unit of risk. Black Diamond Group is currently generating about 0.08 per unit of volatility. If you would invest 371.00 in Black Diamond Group on October 21, 2024 and sell it today you would earn a total of 272.00 from holding Black Diamond Group or generate 73.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.53% |
| Values | Daily Returns |
Ashtead Group plc vs. Black Diamond Group
Performance |
| Timeline |
| Ashtead Group plc |
| Black Diamond Group |
Ashtead Group and Black Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Group and Black Diamond
The main advantage of trading using opposite Ashtead Group and Black Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Group position performs unexpectedly, Black Diamond 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 Black Diamond will offset losses from the drop in Black Diamond's long position.| Ashtead Group vs. African Discovery Group | Ashtead Group vs. Emeco Holdings Limited | Ashtead Group vs. Solution Financial | Ashtead Group vs. BOC Aviation Limited |
| Black Diamond vs. BOC Aviation Limited | Black Diamond vs. Alta Equipment Group | Black Diamond vs. Ashtead Group plc | Black Diamond vs. African Discovery Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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