Correlation Between Solution Financial and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Solution Financial 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 Solution Financial and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Financial and Alta Equipment Group, you can compare the effects of market volatilities on Solution Financial 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 Solution Financial with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Financial and Alta Equipment.
Diversification Opportunities for Solution Financial and Alta Equipment
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Solution and Alta is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Solution Financial 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 Solution Financial 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 Solution Financial 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 Solution Financial i.e., Solution Financial and Alta Equipment go up and down completely randomly.
Pair Corralation between Solution Financial and Alta Equipment
Assuming the 90 days horizon Solution Financial is expected to generate 1.67 times less return on investment than Alta Equipment. In addition to that, Solution Financial is 1.99 times more volatile than Alta Equipment Group. It trades about 0.01 of its total potential returns per unit of risk. Alta Equipment Group is currently generating about 0.03 per unit of volatility. If you would invest 2,084 in Alta Equipment Group on August 24, 2024 and sell it today you would earn a total of 463.00 from holding Alta Equipment Group or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
Solution Financial vs. Alta Equipment Group
Performance |
| Timeline |
| Solution Financial |
| Alta Equipment Group |
Solution Financial and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Financial and Alta Equipment
The main advantage of trading using opposite Solution Financial and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Financial 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.| Solution Financial vs. Ashtead Group plc | Solution Financial vs. African Discovery Group | Solution Financial vs. Emeco Holdings Limited | Solution Financial vs. BOC Aviation Limited |
| Alta Equipment vs. Triton International Limited | Alta Equipment vs. Babcock Wilcox Enterprises | Alta Equipment vs. Triton International Limited | Alta Equipment vs. Triton International Limited |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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