Correlation Between Custom Truck and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Custom Truck 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 Custom Truck and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Custom Truck One and Alta Equipment Group, you can compare the effects of market volatilities on Custom Truck 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 Custom Truck with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and Alta Equipment.
Diversification Opportunities for Custom Truck and Alta Equipment
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Custom and Alta is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One 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 Custom Truck 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 Custom Truck One 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 Custom Truck i.e., Custom Truck and Alta Equipment go up and down completely randomly.
Pair Corralation between Custom Truck and Alta Equipment
Given the investment horizon of 90 days Custom Truck One is expected to generate 0.81 times more return on investment than Alta Equipment. However, Custom Truck One is 1.23 times less risky than Alta Equipment. It trades about 0.56 of its potential returns per unit of risk. Alta Equipment Group is currently generating about 0.18 per unit of risk. If you would invest 356.00 in Custom Truck One on August 27, 2024 and sell it today you would earn a total of 216.00 from holding Custom Truck One or generate 60.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Custom Truck One vs. Alta Equipment Group
Performance |
| Timeline |
| Custom Truck One |
| Alta Equipment Group |
Custom Truck and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Custom Truck and Alta Equipment
The main advantage of trading using opposite Custom Truck and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck 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.| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. Mega Matrix Corp | Custom Truck vs. FTAI Aviation Ltd |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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