Correlation Between All American and McGrath RentCorp

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

By analyzing existing cross correlation between All American Pet and McGrath RentCorp, you can compare the effects of market volatilities on All American and McGrath RentCorp 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 All American with a short position of McGrath RentCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of All American and McGrath RentCorp.

Diversification Opportunities for All American and McGrath RentCorp

0.0

Correlation Coefficient

All American  McGrath RentCorp

Pay attention - limited upside

The 3 months correlation between All and McGrath is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding All American Pet and McGrath RentCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McGrath RentCorp and All American 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 All American Pet are associated (or correlated) with McGrath RentCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McGrath RentCorp has no effect on the direction of All American i.e., All American and McGrath RentCorp go up and down completely randomly.

Pair Corralation between All American and McGrath RentCorp

If you would invest  10,343  in McGrath RentCorp on September 30, 2024 and sell it today you would earn a total of  736.00  from holding McGrath RentCorp or generate 7.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

All American Pet  vs.  McGrath RentCorp

All American Pet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days All American Pet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, All American is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

McGrath RentCorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in McGrath RentCorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, McGrath RentCorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with All American and McGrath RentCorp

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

The idea behind All American Pet and McGrath RentCorp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.