Correlation Between Custom Truck and McGrath RentCorp
Can any of the company-specific risk be diversified away by investing in both Custom Truck and McGrath RentCorp 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 McGrath RentCorp 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 McGrath RentCorp, you can compare the effects of market volatilities on Custom Truck and McGrath RentCorp 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 McGrath RentCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and McGrath RentCorp.
Diversification Opportunities for Custom Truck and McGrath RentCorp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Custom and McGrath is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and McGrath RentCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McGrath RentCorp 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 McGrath RentCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McGrath RentCorp has no effect on the direction of Custom Truck i.e., Custom Truck and McGrath RentCorp go up and down completely randomly.
Pair Corralation between Custom Truck and McGrath RentCorp
Given the investment horizon of 90 days Custom Truck One is expected to generate 2.29 times more return on investment than McGrath RentCorp. However, Custom Truck is 2.29 times more volatile than McGrath RentCorp. It trades about 0.0 of its potential returns per unit of risk. McGrath RentCorp is currently generating about 0.0 per unit of risk. If you would invest 642.00 in Custom Truck One on August 27, 2024 and sell it today you would lose (70.00) from holding Custom Truck One or give up 10.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Custom Truck One vs. McGrath RentCorp
Performance |
| Timeline |
| Custom Truck One |
| McGrath RentCorp |
Custom Truck and McGrath RentCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Custom Truck and McGrath RentCorp
The main advantage of trading using opposite Custom Truck and McGrath RentCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck position performs unexpectedly, McGrath RentCorp 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 McGrath RentCorp will offset losses from the drop in McGrath RentCorp'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 |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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