Correlation Between Rev and Alamo
Can any of the company-specific risk be diversified away by investing in both Rev and Alamo 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 Rev and Alamo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rev Group and Alamo Group, you can compare the effects of market volatilities on Rev and Alamo 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 Rev with a short position of Alamo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rev and Alamo.
Diversification Opportunities for Rev and Alamo
Very good diversification
The 3 months correlation between Rev and Alamo is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Rev Group and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Group and Rev 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 Rev Group are associated (or correlated) with Alamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Group has no effect on the direction of Rev i.e., Rev and Alamo go up and down completely randomly.
Pair Corralation between Rev and Alamo
Given the investment horizon of 90 days Rev Group is expected to under-perform the Alamo. In addition to that, Rev is 1.88 times more volatile than Alamo Group. It trades about -0.04 of its total potential returns per unit of risk. Alamo Group is currently generating about 0.06 per unit of volatility. If you would invest 18,235 in Alamo Group on November 18, 2024 and sell it today you would earn a total of 221.00 from holding Alamo Group or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rev Group vs. Alamo Group
Performance |
| Timeline |
| Rev Group |
| Alamo Group |
Rev and Alamo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rev and Alamo
The main advantage of trading using opposite Rev and Alamo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rev position performs unexpectedly, Alamo 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 Alamo will offset losses from the drop in Alamo's long position.The idea behind Rev Group and Alamo 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.| Alamo vs. Hyster Yale Materials Handling | Alamo vs. Columbus McKinnon | Alamo vs. AGCO Corporation | Alamo vs. Titan International |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |