Correlation Between Alamo and Water Ways
Can any of the company-specific risk be diversified away by investing in both Alamo and Water Ways 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 Alamo and Water Ways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamo Group and Water Ways Technologies, you can compare the effects of market volatilities on Alamo and Water Ways 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 Alamo with a short position of Water Ways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and Water Ways.
Diversification Opportunities for Alamo and Water Ways
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alamo and Water is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Water Ways Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Water Ways Technologies and Alamo 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 Alamo Group are associated (or correlated) with Water Ways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Water Ways Technologies has no effect on the direction of Alamo i.e., Alamo and Water Ways go up and down completely randomly.
Pair Corralation between Alamo and Water Ways
Considering the 90-day investment horizon Alamo Group is expected to under-perform the Water Ways. But the stock apears to be less risky and, when comparing its historical volatility, Alamo Group is 91.96 times less risky than Water Ways. The stock trades about -0.16 of its potential returns per unit of risk. The Water Ways Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Water Ways Technologies on December 1, 2024 and sell it today you would lose (19.86) from holding Water Ways Technologies or give up 99.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 93.75% |
Values | Daily Returns |
Alamo Group vs. Water Ways Technologies
Performance |
Timeline |
Alamo Group |
Water Ways Technologies |
Alamo and Water Ways Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alamo and Water Ways
The main advantage of trading using opposite Alamo and Water Ways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo position performs unexpectedly, Water Ways 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 Water Ways will offset losses from the drop in Water Ways' long position.Alamo vs. Hyster Yale Materials Handling | Alamo vs. Columbus McKinnon | Alamo vs. AGCO Corporation | Alamo vs. Titan International |
Water Ways vs. Alamo Group | Water Ways vs. Hyster Yale Materials Handling | Water Ways vs. Columbus McKinnon | Water Ways vs. AGCO Corporation |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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