Correlation Between Ashtead Group and WillScot Mobile

Can any of the company-specific risk be diversified away by investing in both Ashtead Group and WillScot Mobile 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 WillScot Mobile 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 WillScot Mobile Mini, you can compare the effects of market volatilities on Ashtead Group and WillScot Mobile 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 WillScot Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Group and WillScot Mobile.

Diversification Opportunities for Ashtead Group and WillScot Mobile

0.26

Correlation Coefficient

Ashtead Group  WillScot Mobile

Modest diversification

The 3 months correlation between Ashtead and WillScot is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Group plc and WillScot Mobile Mini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WillScot Mobile Mini 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 WillScot Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WillScot Mobile Mini has no effect on the direction of Ashtead Group i.e., Ashtead Group and WillScot Mobile go up and down completely randomly.

Pair Corralation between Ashtead Group and WillScot Mobile

Assuming the 90 days horizon Ashtead Group plc is expected to generate 0.48 times more return on investment than WillScot Mobile. However, Ashtead Group plc is 2.09 times less risky than WillScot Mobile. It trades about 0.18 of its potential returns per unit of risk. WillScot Mobile Mini is currently generating about 0.04 per unit of risk. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ashtead Group plc  vs.  WillScot Mobile Mini

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.

WillScot Mobile Mini

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WillScot Mobile Mini are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WillScot Mobile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ashtead Group and WillScot Mobile

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

The idea behind Ashtead Group plc and WillScot Mobile Mini 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.