Correlation Between Black Diamond and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Black Diamond 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 Black Diamond and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Diamond Group and Alta Equipment Group, you can compare the effects of market volatilities on Black Diamond 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 Black Diamond with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Diamond and Alta Equipment.
Diversification Opportunities for Black Diamond and Alta Equipment
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Black and Alta is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Black Diamond Group 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 Black Diamond 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 Black Diamond Group 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 Black Diamond i.e., Black Diamond and Alta Equipment go up and down completely randomly.
Pair Corralation between Black Diamond and Alta Equipment
Assuming the 90 days horizon Black Diamond Group is expected to under-perform the Alta Equipment. But the otc stock apears to be less risky and, when comparing its historical volatility, Black Diamond Group is 1.78 times less risky than Alta Equipment. The otc stock trades about -0.18 of its potential returns per unit of risk. The Alta Equipment Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,508 in Alta Equipment Group on November 2, 2024 and sell it today you would earn a total of 37.00 from holding Alta Equipment Group or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Black Diamond Group vs. Alta Equipment Group
Performance |
| Timeline |
| Black Diamond Group |
| Alta Equipment Group |
Black Diamond and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Diamond and Alta Equipment
The main advantage of trading using opposite Black Diamond and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Diamond 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.| Black Diamond vs. Berkshire Hathaway | Black Diamond vs. First Physicians Capital | Black Diamond vs. Transcode Therapeutics | Black Diamond vs. Ashford Hospitality Trust |
| Alta Equipment vs. Triton International Limited | Alta Equipment vs. Babcock Wilcox Enterprises | Alta Equipment vs. Triton International Limited | Alta Equipment vs. Triton International 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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