Correlation Between Sixt SE and Ashtead Group

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

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

Diversification Opportunities for Sixt SE and Ashtead Group

0.52

Correlation Coefficient

Sixt SE  Ashtead Group

Very weak diversification

The 3 months correlation between Sixt and Ashtead is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sixt SE and Ashtead Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group plc and Sixt SE 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 Sixt SE are associated (or correlated) with Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group plc has no effect on the direction of Sixt SE i.e., Sixt SE and Ashtead Group go up and down completely randomly.

Pair Corralation between Sixt SE and Ashtead Group

Assuming the 90 days trading horizon Sixt SE is expected to generate 3.32 times less return on investment than Ashtead Group. In addition to that, Sixt SE is 1.18 times more volatile than Ashtead Group plc. It trades about 0.05 of its total potential returns per unit of risk. Ashtead Group plc is currently generating about 0.18 per unit of volatility. If you would invest  6,300  in Ashtead Group plc on September 3, 2024 and sell it today you would earn a total of  1,250  from holding Ashtead Group plc or generate 19.84% return on investment over 90 days.

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

Sixt SE  vs.  Ashtead Group plc

Sixt SE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Sixt SE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ashtead Group plc

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with Sixt SE and Ashtead Group

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

The idea behind Sixt SE and Ashtead Group plc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.