Correlation Between U-Haul Holding and Alta Equipment

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

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

Diversification Opportunities for U-Haul Holding and Alta Equipment

-0.45

Correlation Coefficient

U-Haul Holding  Alta Equipment

Very good diversification

The 3 months correlation between U-Haul and Alta is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding U Haul Holding 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 U-Haul Holding 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 U Haul Holding 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 U-Haul Holding i.e., U-Haul Holding and Alta Equipment go up and down completely randomly.

Pair Corralation between U-Haul Holding and Alta Equipment

Assuming the 90 days trading horizon U Haul Holding is expected to under-perform the Alta Equipment. But the stock apears to be less risky and, when comparing its historical volatility, U Haul Holding is 2.7 times less risky than Alta Equipment. The stock trades about -0.06 of its potential returns per unit of risk. The Alta Equipment Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  640.00  in Alta Equipment Group on September 2, 2024 and sell it today you would earn a total of  151.00  from holding Alta Equipment Group or generate 23.59% return on investment over 90 days.

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

U Haul Holding  vs.  Alta Equipment Group

U Haul Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with U-Haul Holding and Alta Equipment

The main advantage of trading using opposite U-Haul Holding and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U-Haul Holding 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 U Haul Holding 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.