Correlation Between Ashtead Technology and WW Grainger
Can any of the company-specific risk be diversified away by investing in both Ashtead Technology and WW Grainger 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 Technology and WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashtead Technology Holdings and WW Grainger, you can compare the effects of market volatilities on Ashtead Technology and WW Grainger 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 Technology with a short position of WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Technology and WW Grainger.
Diversification Opportunities for Ashtead Technology and WW Grainger
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ashtead and 0IZI is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger and Ashtead Technology 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 Technology Holdings are associated (or correlated) with WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and WW Grainger go up and down completely randomly.
Pair Corralation between Ashtead Technology and WW Grainger
Assuming the 90 days trading horizon Ashtead Technology Holdings is expected to generate 1.79 times more return on investment than WW Grainger. However, Ashtead Technology is 1.79 times more volatile than WW Grainger. It trades about 0.15 of its potential returns per unit of risk. WW Grainger is currently generating about -0.17 per unit of risk. If you would invest 50,200 in Ashtead Technology Holdings on September 13, 2024 and sell it today you would earn a total of 3,100 from holding Ashtead Technology Holdings or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashtead Technology Holdings vs. WW Grainger
Performance |
| Timeline |
| Ashtead Technology |
| WW Grainger |
Ashtead Technology and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Technology and WW Grainger
The main advantage of trading using opposite Ashtead Technology and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Technology position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger's long position.| Ashtead Technology vs. Zoom Video Communications | Ashtead Technology vs. Enbridge | Ashtead Technology vs. Endo International PLC | Ashtead Technology vs. Blue Star Capital |
| WW Grainger vs. Empire Metals Limited | WW Grainger vs. Darden Restaurants | WW Grainger vs. Cars Inc | WW Grainger vs. AMG Advanced Metallurgical |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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