Correlation Between LENSAR and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both LENSAR 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 LENSAR and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LENSAR Inc and Alta Equipment Group, you can compare the effects of market volatilities on LENSAR 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 LENSAR with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LENSAR and Alta Equipment.
Diversification Opportunities for LENSAR and Alta Equipment
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between LENSAR and Alta is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc 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 LENSAR 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 LENSAR Inc 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 LENSAR i.e., LENSAR and Alta Equipment go up and down completely randomly.
Pair Corralation between LENSAR and Alta Equipment
Given the investment horizon of 90 days LENSAR Inc is expected to generate 1.18 times more return on investment than Alta Equipment. However, LENSAR is 1.18 times more volatile than Alta Equipment Group. It trades about 0.0 of its potential returns per unit of risk. Alta Equipment Group is currently generating about -0.24 per unit of risk. If you would invest 1,113 in LENSAR Inc on November 29, 2024 and sell it today you would lose (26.00) from holding LENSAR Inc or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LENSAR Inc vs. Alta Equipment Group
Performance |
| Timeline |
| LENSAR Inc |
| Alta Equipment Group |
LENSAR and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LENSAR and Alta Equipment
The main advantage of trading using opposite LENSAR and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LENSAR 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.The idea behind LENSAR Inc and Alta Equipment Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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