Correlation Between HE Equipment and DHC Acquisition
Can any of the company-specific risk be diversified away by investing in both HE Equipment and DHC Acquisition 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 DHC Acquisition 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 DHC Acquisition Corp, you can compare the effects of market volatilities on HE Equipment and DHC Acquisition 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 DHC Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and DHC Acquisition.
Diversification Opportunities for HE Equipment and DHC Acquisition
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEES and DHC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and DHC Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHC Acquisition Corp 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 DHC Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHC Acquisition Corp has no effect on the direction of HE Equipment i.e., HE Equipment and DHC Acquisition go up and down completely randomly.
Pair Corralation between HE Equipment and DHC Acquisition
Given the investment horizon of 90 days HE Equipment Services is expected to generate 4.75 times more return on investment than DHC Acquisition. However, HE Equipment is 4.75 times more volatile than DHC Acquisition Corp. It trades about 0.04 of its potential returns per unit of risk. DHC Acquisition Corp is currently generating about 0.02 per unit of risk. If you would invest 4,164 in HE Equipment Services on September 5, 2024 and sell it today you would earn a total of 1,668 from holding HE Equipment Services or generate 40.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.3% |
| Values | Daily Returns |
HE Equipment Services vs. DHC Acquisition Corp
Performance |
| Timeline |
| HE Equipment Services |
| DHC Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
HE Equipment and DHC Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and DHC Acquisition
The main advantage of trading using opposite HE Equipment and DHC Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, DHC Acquisition 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 DHC Acquisition will offset losses from the drop in DHC Acquisition's long position.| HE Equipment vs. Alta Equipment Group | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Herc Holdings | HE Equipment vs. PROG Holdings |
| DHC Acquisition vs. Sligro Food Group | DHC Acquisition vs. Lifevantage | DHC Acquisition vs. FitLife Brands, Common | DHC Acquisition vs. Vera Bradley |
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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