Correlation Between Alta Equipment and PROCTER

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

By analyzing existing cross correlation between Alta Equipment Group and PROCTER GAMBLE 285, you can compare the effects of market volatilities on Alta Equipment and PROCTER 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 Alta Equipment with a short position of PROCTER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and PROCTER.

Diversification Opportunities for Alta Equipment and PROCTER

-0.48

Correlation Coefficient

Alta Equipment  PROCTER

Very good diversification

The 3 months correlation between Alta and PROCTER is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and PROCTER GAMBLE 285 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROCTER GAMBLE 285 and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with PROCTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROCTER GAMBLE 285 has no effect on the direction of Alta Equipment i.e., Alta Equipment and PROCTER go up and down completely randomly.

Pair Corralation between Alta Equipment and PROCTER

Given the investment horizon of 90 days Alta Equipment Group is expected to generate 8.25 times more return on investment than PROCTER. However, Alta Equipment is 8.25 times more volatile than PROCTER GAMBLE 285. It trades about 0.09 of its potential returns per unit of risk. PROCTER GAMBLE 285 is currently generating about 0.0 per unit of risk. If you would invest  642.00  in Alta Equipment Group on September 13, 2024 and sell it today you would earn a total of  126.00  from holding Alta Equipment Group or generate 19.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Alta Equipment Group  vs.  PROCTER GAMBLE 285

Alta Equipment Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alta Equipment reported solid returns over the last few months and may actually be approaching a breakup point.

PROCTER GAMBLE 285

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROCTER GAMBLE 285 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PROCTER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alta Equipment and PROCTER

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

The idea behind Alta Equipment Group and PROCTER GAMBLE 285 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.