Correlation Between Alta Equipment and Envista Holdings

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

Diversification Opportunities for Alta Equipment and Envista Holdings

0.75

Correlation Coefficient

Alta Equipment  Envista Holdings

Poor diversification

The 3 months correlation between Alta and Envista is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Envista Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envista Holdings Corp 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 Envista Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envista Holdings Corp has no effect on the direction of Alta Equipment i.e., Alta Equipment and Envista Holdings go up and down completely randomly.

Pair Corralation between Alta Equipment and Envista Holdings

Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the Envista Holdings. In addition to that, Alta Equipment is 1.31 times more volatile than Envista Holdings Corp. It trades about -0.33 of its total potential returns per unit of risk. Envista Holdings Corp is currently generating about -0.05 per unit of volatility. If you would invest  2,001  in Envista Holdings Corp on October 10, 2024 and sell it today you would lose (52.00) from holding Envista Holdings Corp or give up 2.6% of portfolio value over 90 days.

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

Alta Equipment Group  vs.  Envista Holdings Corp

Alta Equipment Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 5 (%) 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.

Envista Holdings Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Envista Holdings Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Envista Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alta Equipment and Envista Holdings

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

The idea behind Alta Equipment Group and Envista Holdings Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.