Correlation Between Triton International and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Triton International 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 Triton International and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triton International Limited and Alta Equipment Group, you can compare the effects of market volatilities on Triton International 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 Triton International with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triton International and Alta Equipment.
Diversification Opportunities for Triton International and Alta Equipment
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Triton and Alta is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited 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 Triton International 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 Triton International Limited 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 Triton International i.e., Triton International and Alta Equipment go up and down completely randomly.
Pair Corralation between Triton International and Alta Equipment
Assuming the 90 days trading horizon Triton International Limited is expected to under-perform the Alta Equipment. But the preferred stock apears to be less risky and, when comparing its historical volatility, Triton International Limited is 3.51 times less risky than Alta Equipment. The preferred stock trades about -0.15 of its potential returns per unit of risk. The Alta Equipment Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,550 in Alta Equipment Group on August 27, 2024 and sell it today you would lose (3.00) from holding Alta Equipment Group or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triton International Limited vs. Alta Equipment Group
Performance |
| Timeline |
| Triton International |
| Alta Equipment Group |
Triton International and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triton International and Alta Equipment
The main advantage of trading using opposite Triton International and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International 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 Triton International Limited 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. 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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