Correlation Between McGrath RentCorp and Ashtead Gro
Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp and Ashtead Gro 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 McGrath RentCorp and Ashtead Gro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McGrath RentCorp and Ashtead Gro, you can compare the effects of market volatilities on McGrath RentCorp and Ashtead Gro 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 McGrath RentCorp with a short position of Ashtead Gro. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and Ashtead Gro.
Diversification Opportunities for McGrath RentCorp and Ashtead Gro
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between McGrath and Ashtead is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding McGrath RentCorp and Ashtead Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Gro and McGrath RentCorp 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 McGrath RentCorp are associated (or correlated) with Ashtead Gro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Gro has no effect on the direction of McGrath RentCorp i.e., McGrath RentCorp and Ashtead Gro go up and down completely randomly.
Pair Corralation between McGrath RentCorp and Ashtead Gro
Given the investment horizon of 90 days McGrath RentCorp is expected to generate 0.83 times more return on investment than Ashtead Gro. However, McGrath RentCorp is 1.21 times less risky than Ashtead Gro. It trades about 0.06 of its potential returns per unit of risk. Ashtead Gro is currently generating about -0.03 per unit of risk. If you would invest 10,601 in McGrath RentCorp on November 28, 2024 and sell it today you would earn a total of 1,924 from holding McGrath RentCorp or generate 18.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McGrath RentCorp vs. Ashtead Gro
Performance |
| Timeline |
| McGrath RentCorp |
| Ashtead Gro |
McGrath RentCorp and Ashtead Gro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McGrath RentCorp and Ashtead Gro
The main advantage of trading using opposite McGrath RentCorp and Ashtead Gro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McGrath RentCorp position performs unexpectedly, Ashtead Gro 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 Ashtead Gro will offset losses from the drop in Ashtead Gro's long position.| McGrath RentCorp vs. Alta Equipment Group | McGrath RentCorp vs. GATX Corporation | McGrath RentCorp vs. Mega Matrix Corp | McGrath RentCorp vs. FTAI Aviation Ltd |
| Ashtead Gro vs. African Discovery Group | Ashtead Gro vs. BOC Aviation Limited | Ashtead Gro vs. Black Diamond Group | Ashtead Gro vs. Alta Equipment Group |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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