Correlation Between Western Sierra and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Western Sierra 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 Western Sierra and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Sierra Mining and Alta Equipment Group, you can compare the effects of market volatilities on Western Sierra 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 Western Sierra with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Sierra and Alta Equipment.
Diversification Opportunities for Western Sierra and Alta Equipment
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Alta is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Western Sierra Mining 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 Western Sierra 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 Western Sierra Mining 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 Western Sierra i.e., Western Sierra and Alta Equipment go up and down completely randomly.
Pair Corralation between Western Sierra and Alta Equipment
Given the investment horizon of 90 days Western Sierra Mining is expected to generate 34.69 times more return on investment than Alta Equipment. However, Western Sierra is 34.69 times more volatile than Alta Equipment Group. It trades about 0.14 of its potential returns per unit of risk. Alta Equipment Group is currently generating about 0.02 per unit of risk. If you would invest 2.50 in Western Sierra Mining on September 1, 2024 and sell it today you would lose (1.82) from holding Western Sierra Mining or give up 72.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Western Sierra Mining vs. Alta Equipment Group
Performance |
| Timeline |
| Western Sierra Mining |
| Alta Equipment Group |
Western Sierra and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Sierra and Alta Equipment
The main advantage of trading using opposite Western Sierra and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Sierra 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.| Western Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Rimrock Gold Corp | Western Sierra vs. Galexxy Holdings |
| Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Herc Holdings | Alta Equipment vs. PROG Holdings | Alta Equipment vs. Custom Truck One |
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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