Correlation Between Bright Scholar and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Bright Scholar 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 Bright Scholar and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Scholar Education and Alta Equipment Group, you can compare the effects of market volatilities on Bright Scholar 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 Bright Scholar with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and Alta Equipment.
Diversification Opportunities for Bright Scholar and Alta Equipment
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bright and Alta is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education 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 Bright Scholar 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 Bright Scholar Education 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 Bright Scholar i.e., Bright Scholar and Alta Equipment go up and down completely randomly.
Pair Corralation between Bright Scholar and Alta Equipment
Given the investment horizon of 90 days Bright Scholar Education is expected to under-perform the Alta Equipment. But the stock apears to be less risky and, when comparing its historical volatility, Bright Scholar Education is 1.8 times less risky than Alta Equipment. The stock trades about -0.05 of its potential returns per unit of risk. The Alta Equipment Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 615.00 in Alta Equipment Group on August 26, 2024 and sell it today you would earn a total of 176.00 from holding Alta Equipment Group or generate 28.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Bright Scholar Education vs. Alta Equipment Group
Performance |
| Timeline |
| Bright Scholar Education |
| Alta Equipment Group |
Bright Scholar and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Scholar and Alta Equipment
The main advantage of trading using opposite Bright Scholar and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar 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.| Bright Scholar vs. Laureate Education | Bright Scholar vs. China Liberal Education | Bright Scholar vs. Adtalem Global Education | Bright Scholar vs. Grand Canyon Education |
| Alta Equipment vs. PROG Holdings | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Mega Matrix Corp | Alta Equipment vs. FTAI Aviation Ltd |
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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