Correlation Between Neogen and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Neogen 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 Neogen and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neogen and Alta Equipment Group, you can compare the effects of market volatilities on Neogen 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 Neogen with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neogen and Alta Equipment.
Diversification Opportunities for Neogen and Alta Equipment
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Neogen and Alta is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Neogen 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 Neogen 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 Neogen 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 Neogen i.e., Neogen and Alta Equipment go up and down completely randomly.
Pair Corralation between Neogen and Alta Equipment
Given the investment horizon of 90 days Neogen is expected to generate 11.91 times less return on investment than Alta Equipment. But when comparing it to its historical volatility, Neogen is 1.65 times less risky than Alta Equipment. It trades about 0.02 of its potential returns per unit of risk. Alta Equipment Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 665.00 in Alta Equipment Group on August 29, 2024 and sell it today you would earn a total of 124.00 from holding Alta Equipment Group or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neogen vs. Alta Equipment Group
Performance |
| Timeline |
| Neogen |
| Alta Equipment Group |
Neogen and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neogen and Alta Equipment
The main advantage of trading using opposite Neogen and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neogen 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 Neogen 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |