Correlation Between McGrath RentCorp and Smart Powerr
Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp and Smart Powerr 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 Smart Powerr into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McGrath RentCorp and Smart Powerr Corp, you can compare the effects of market volatilities on McGrath RentCorp and Smart Powerr 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 Smart Powerr. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and Smart Powerr.
Diversification Opportunities for McGrath RentCorp and Smart Powerr
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McGrath and Smart is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding McGrath RentCorp and Smart Powerr Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Powerr Corp 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 Smart Powerr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Powerr Corp has no effect on the direction of McGrath RentCorp i.e., McGrath RentCorp and Smart Powerr go up and down completely randomly.
Pair Corralation between McGrath RentCorp and Smart Powerr
Given the investment horizon of 90 days McGrath RentCorp is expected to generate 0.35 times more return on investment than Smart Powerr. However, McGrath RentCorp is 2.89 times less risky than Smart Powerr. It trades about 0.52 of its potential returns per unit of risk. Smart Powerr Corp is currently generating about -0.1 per unit of risk. If you would invest 10,964 in McGrath RentCorp on November 5, 2024 and sell it today you would earn a total of 1,303 from holding McGrath RentCorp or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McGrath RentCorp vs. Smart Powerr Corp
Performance |
| Timeline |
| McGrath RentCorp |
| Smart Powerr Corp |
McGrath RentCorp and Smart Powerr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McGrath RentCorp and Smart Powerr
The main advantage of trading using opposite McGrath RentCorp and Smart Powerr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McGrath RentCorp position performs unexpectedly, Smart Powerr 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 Smart Powerr will offset losses from the drop in Smart Powerr'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 |
| Smart Powerr vs. Verde Clean Fuels | Smart Powerr vs. Ormat Technologies | Smart Powerr vs. Tokyo Electric Power | Smart Powerr vs. Verde Clean Fuels |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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