Correlation Between Cumulus Media and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Cumulus Media 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 Cumulus Media and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumulus Media Class and Alta Equipment Group, you can compare the effects of market volatilities on Cumulus Media 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 Cumulus Media with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and Alta Equipment.
Diversification Opportunities for Cumulus Media and Alta Equipment
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cumulus and Alta is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class 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 Cumulus Media 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 Cumulus Media Class 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 Cumulus Media i.e., Cumulus Media and Alta Equipment go up and down completely randomly.
Pair Corralation between Cumulus Media and Alta Equipment
Given the investment horizon of 90 days Cumulus Media Class is expected to under-perform the Alta Equipment. In addition to that, Cumulus Media is 1.26 times more volatile than Alta Equipment Group. It trades about -0.27 of its total potential returns per unit of risk. Alta Equipment Group is currently generating about 0.2 per unit of volatility. If you would invest 639.00 in Alta Equipment Group on August 30, 2024 and sell it today you would earn a total of 135.00 from holding Alta Equipment Group or generate 21.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumulus Media Class vs. Alta Equipment Group
Performance |
| Timeline |
| Cumulus Media Class |
| Alta Equipment Group |
Cumulus Media and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and Alta Equipment
The main advantage of trading using opposite Cumulus Media and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media 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.| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus Media vs. RTL Group SA |
| Alta Equipment vs. HE Equipment Services | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Ryder System |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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