Correlation Between Ashtead Group and Sixt SE

Can any of the company-specific risk be diversified away by investing in both Ashtead Group and Sixt SE 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 Ashtead Group and Sixt SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ashtead Group plc and Sixt SE, you can compare the effects of market volatilities on Ashtead Group and Sixt SE 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 Ashtead Group with a short position of Sixt SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Group and Sixt SE.

Diversification Opportunities for Ashtead Group and Sixt SE

0.04

Correlation Coefficient

Ashtead Group  Sixt SE

Significant diversification

The 3 months correlation between Ashtead and Sixt is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Group plc and Sixt SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt SE and Ashtead Group 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 Ashtead Group plc are associated (or correlated) with Sixt SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt SE has no effect on the direction of Ashtead Group i.e., Ashtead Group and Sixt SE go up and down completely randomly.

Pair Corralation between Ashtead Group and Sixt SE

Assuming the 90 days horizon Ashtead Group plc is expected to generate 1.07 times more return on investment than Sixt SE. However, Ashtead Group is 1.07 times more volatile than Sixt SE. It trades about 0.03 of its potential returns per unit of risk. Sixt SE is currently generating about 0.01 per unit of risk. If you would invest  5,173  in Ashtead Group plc on September 22, 2024 and sell it today you would earn a total of  977.00  from holding Ashtead Group plc or generate 18.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ashtead Group plc  vs.  Sixt SE

Ashtead Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashtead Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ashtead Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sixt SE

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt SE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sixt SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ashtead Group and Sixt SE

The main advantage of trading using opposite Ashtead Group and Sixt SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Group position performs unexpectedly, Sixt SE 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 Sixt SE will offset losses from the drop in Sixt SE's long position.

The idea behind Ashtead Group plc and Sixt SE 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.

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.