Correlation Between Ashtead Technology and Guaranty Trust
Can any of the company-specific risk be diversified away by investing in both Ashtead Technology and Guaranty Trust 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 Guaranty Trust 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 Guaranty Trust Holding, you can compare the effects of market volatilities on Ashtead Technology and Guaranty Trust 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 Guaranty Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Technology and Guaranty Trust.
Diversification Opportunities for Ashtead Technology and Guaranty Trust
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashtead and Guaranty is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and Guaranty Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guaranty Trust Holding 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 Guaranty Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guaranty Trust Holding has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and Guaranty Trust go up and down completely randomly.
Pair Corralation between Ashtead Technology and Guaranty Trust
Assuming the 90 days trading horizon Ashtead Technology Holdings is expected to generate 1.36 times more return on investment than Guaranty Trust. However, Ashtead Technology is 1.36 times more volatile than Guaranty Trust Holding. It trades about 0.1 of its potential returns per unit of risk. Guaranty Trust Holding is currently generating about 0.06 per unit of risk. If you would invest 51,300 in Ashtead Technology Holdings on September 12, 2024 and sell it today you would earn a total of 2,000 from holding Ashtead Technology Holdings or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ashtead Technology Holdings vs. Guaranty Trust Holding
Performance |
| Timeline |
| Ashtead Technology |
| Guaranty Trust Holding |
Ashtead Technology and Guaranty Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Technology and Guaranty Trust
The main advantage of trading using opposite Ashtead Technology and Guaranty Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Technology position performs unexpectedly, Guaranty Trust 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 Guaranty Trust will offset losses from the drop in Guaranty Trust's long position.| Ashtead Technology vs. Zoom Video Communications | Ashtead Technology vs. Neometals | Ashtead Technology vs. Coor Service Management | Ashtead Technology vs. Fidelity Sustainable USD |
| Guaranty Trust vs. Deltex Medical Group | Guaranty Trust vs. United Utilities Group | Guaranty Trust vs. Sabien Technology Group | Guaranty Trust vs. Ashtead Technology Holdings |
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.
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