Correlation Between Ashtead Group and Solution Financial
Can any of the company-specific risk be diversified away by investing in both Ashtead Group and Solution Financial 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 Solution Financial 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 Solution Financial, you can compare the effects of market volatilities on Ashtead Group and Solution Financial 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 Solution Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Group and Solution Financial.
Diversification Opportunities for Ashtead Group and Solution Financial
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ashtead and Solution is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Group plc and Solution Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Financial 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 Solution Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Financial has no effect on the direction of Ashtead Group i.e., Ashtead Group and Solution Financial go up and down completely randomly.
Pair Corralation between Ashtead Group and Solution Financial
Assuming the 90 days horizon Ashtead Group plc is expected to generate 0.72 times more return on investment than Solution Financial. However, Ashtead Group plc is 1.38 times less risky than Solution Financial. It trades about 0.08 of its potential returns per unit of risk. Solution Financial is currently generating about -0.06 per unit of risk. If you would invest 7,605 in Ashtead Group plc on August 24, 2024 and sell it today you would earn a total of 262.00 from holding Ashtead Group plc or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashtead Group plc vs. Solution Financial
Performance |
| Timeline |
| Ashtead Group plc |
| Solution Financial |
Ashtead Group and Solution Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Group and Solution Financial
The main advantage of trading using opposite Ashtead Group and Solution Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Group position performs unexpectedly, Solution Financial 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 Solution Financial will offset losses from the drop in Solution Financial's long position.| Ashtead Group vs. United Rentals | Ashtead Group vs. Ashtead Gro | Ashtead Group vs. AerCap Holdings NV | Ashtead Group vs. Fortress Transp Infra |
| Solution Financial vs. Ashtead Group plc | Solution Financial vs. African Discovery Group | Solution Financial vs. Emeco Holdings Limited | Solution Financial vs. BOC Aviation Limited |
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
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |