Correlation Between Alta Equipment and U Haul

Can any of the company-specific risk be diversified away by investing in both Alta Equipment and U Haul 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 U Haul 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 U Haul Holding, you can compare the effects of market volatilities on Alta Equipment and U Haul 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 U Haul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and U Haul.

Diversification Opportunities for Alta Equipment and U Haul

-0.63

Correlation Coefficient

Alta Equipment  U Haul

Excellent diversification

The 3 months correlation between Alta and UHAL is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and U Haul Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Haul Holding 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 U Haul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Haul Holding has no effect on the direction of Alta Equipment i.e., Alta Equipment and U Haul go up and down completely randomly.

Pair Corralation between Alta Equipment and U Haul

Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the U Haul. In addition to that, Alta Equipment is 2.29 times more volatile than U Haul Holding. It trades about -0.1 of its total potential returns per unit of risk. U Haul Holding is currently generating about 0.04 per unit of volatility. If you would invest  7,348  in U Haul Holding on July 19, 2024 and sell it today you would earn a total of  72.00  from holding U Haul Holding or generate 0.98% return on investment over 90 days.

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

Alta Equipment Group  vs.  U Haul Holding

Alta Equipment Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alta Equipment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

U Haul Holding

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in U Haul Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, U Haul disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alta Equipment and U Haul

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

The idea behind Alta Equipment Group and U Haul Holding 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.