Correlation Between Shyft and Alamo
Can any of the company-specific risk be diversified away by investing in both Shyft 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 Shyft and Alamo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shyft Group and Alamo Group, you can compare the effects of market volatilities on Shyft 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 Shyft with a short position of Alamo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shyft and Alamo.
Diversification Opportunities for Shyft and Alamo
Very poor diversification
The 3 months correlation between Shyft and Alamo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shyft Group and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Group and Shyft 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 Shyft 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 Shyft i.e., Shyft and Alamo go up and down completely randomly.
Pair Corralation between Shyft and Alamo
Given the investment horizon of 90 days Shyft Group is expected to under-perform the Alamo. In addition to that, Shyft is 1.68 times more volatile than Alamo Group. It trades about -0.03 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shyft Group vs. Alamo Group
Performance |
| Timeline |
| Shyft Group |
| Alamo Group |
Shyft and Alamo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shyft and Alamo
The main advantage of trading using opposite Shyft and Alamo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shyft 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.| Shyft vs. Astec Industries | Shyft vs. Hyster Yale Materials Handling | Shyft vs. Rev Group | Shyft vs. Lindsay |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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