Correlation Between HE Equipment and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both HE Equipment 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 HE Equipment and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Alta Equipment Group, you can compare the effects of market volatilities on HE Equipment 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 HE Equipment with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Alta Equipment.
Diversification Opportunities for HE Equipment and Alta Equipment
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HEES and Alta is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services 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 HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and Alta Equipment go up and down completely randomly.
Pair Corralation between HE Equipment and Alta Equipment
Given the investment horizon of 90 days HE Equipment Services is expected to generate 8.12 times more return on investment than Alta Equipment. However, HE Equipment is 8.12 times more volatile than Alta Equipment Group. It trades about 0.19 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 4,937 in HE Equipment Services on October 20, 2024 and sell it today you would earn a total of 3,875 from holding HE Equipment Services or generate 78.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Alta Equipment Group
Performance |
| Timeline |
| HE Equipment Services |
| Alta Equipment Group |
HE Equipment and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Alta Equipment
The main advantage of trading using opposite HE Equipment and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |