Correlation Between Terex and Alamo
Can any of the company-specific risk be diversified away by investing in both Terex 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 Terex and Alamo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terex and Alamo Group, you can compare the effects of market volatilities on Terex 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 Terex with a short position of Alamo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terex and Alamo.
Diversification Opportunities for Terex and Alamo
Weak diversification
The 3 months correlation between Terex and Alamo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Terex and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Group and Terex 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 Terex 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 Terex i.e., Terex and Alamo go up and down completely randomly.
Pair Corralation between Terex and Alamo
Considering the 90-day investment horizon Terex is expected to generate 1.36 times more return on investment than Alamo. However, Terex is 1.36 times more volatile than Alamo Group. It trades about 0.03 of its potential returns per unit of risk. Alamo Group is currently generating about 0.02 per unit of risk. If you would invest 4,686 in Terex on August 27, 2024 and sell it today you would earn a total of 694.00 from holding Terex or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terex vs. Alamo Group
Performance |
| Timeline |
| Terex |
| Alamo Group |
Terex and Alamo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terex and Alamo
The main advantage of trading using opposite Terex and Alamo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terex 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.| Terex vs. Lion Electric Corp | Terex vs. Xos Inc | Terex vs. Hydrofarm Holdings Group | Terex vs. AGCO Corporation |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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