Correlation Between Eastern and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Eastern 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 Eastern and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and Alta Equipment Group, you can compare the effects of market volatilities on Eastern 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 Eastern with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Alta Equipment.
Diversification Opportunities for Eastern and Alta Equipment
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eastern and Alta is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co 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 Eastern 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 Eastern Co 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 Eastern i.e., Eastern and Alta Equipment go up and down completely randomly.
Pair Corralation between Eastern and Alta Equipment
Considering the 90-day investment horizon Eastern Co is expected to generate 0.78 times more return on investment than Alta Equipment. However, Eastern Co is 1.27 times less risky than Alta Equipment. It trades about 0.06 of its potential returns per unit of risk. Alta Equipment Group is currently generating about -0.02 per unit of risk. If you would invest 1,668 in Eastern Co on September 1, 2024 and sell it today you would earn a total of 1,204 from holding Eastern Co or generate 72.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Co vs. Alta Equipment Group
Performance |
| Timeline |
| Eastern |
| Alta Equipment Group |
Eastern and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and Alta Equipment
The main advantage of trading using opposite Eastern and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern 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.| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
| Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Herc Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. PROG Holdings |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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