Correlation Between HE Equipment and Triton International
Can any of the company-specific risk be diversified away by investing in both HE Equipment and Triton International 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 Triton International 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 Triton International Limited, you can compare the effects of market volatilities on HE Equipment and Triton International 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 Triton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Triton International.
Diversification Opportunities for HE Equipment and Triton International
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between HEES and Triton is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International 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 Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of HE Equipment i.e., HE Equipment and Triton International go up and down completely randomly.
Pair Corralation between HE Equipment and Triton International
Given the investment horizon of 90 days HE Equipment Services is expected to under-perform the Triton International. But the stock apears to be less risky and, when comparing its historical volatility, HE Equipment Services is 1.93 times less risky than Triton International. The stock trades about -0.05 of its potential returns per unit of risk. The Triton International Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,317 in Triton International Limited on November 18, 2024 and sell it today you would lose (13.00) from holding Triton International Limited or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Triton International Limited
Performance |
| Timeline |
| HE Equipment Services |
| Triton International |
HE Equipment and Triton International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Triton International
The main advantage of trading using opposite HE Equipment and Triton International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, Triton International 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 Triton International will offset losses from the drop in Triton International's long position.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
| Triton International vs. Triton International Limited | Triton International vs. Triton International Limited | Triton International vs. Costamare |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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