Correlation Between Alta Equipment and Shimmick Common

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

Diversification Opportunities for Alta Equipment and Shimmick Common

0.2

Correlation Coefficient

Alta Equipment  Shimmick Common

Modest diversification

The 3 months correlation between Alta and Shimmick is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Shimmick Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimmick Common 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 Shimmick Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimmick Common has no effect on the direction of Alta Equipment i.e., Alta Equipment and Shimmick Common go up and down completely randomly.

Pair Corralation between Alta Equipment and Shimmick Common

Given the investment horizon of 90 days Alta Equipment is expected to generate 1.33 times less return on investment than Shimmick Common. But when comparing it to its historical volatility, Alta Equipment Group is 1.54 times less risky than Shimmick Common. It trades about 0.05 of its potential returns per unit of risk. Shimmick Common is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  234.00  in Shimmick Common on October 11, 2024 and sell it today you would earn a total of  9.00  from holding Shimmick Common or generate 3.85% return on investment over 90 days.

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

Alta Equipment Group  vs.  Shimmick Common

Alta Equipment Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alta Equipment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shimmick Common

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shimmick Common are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Shimmick Common displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alta Equipment and Shimmick Common

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

The idea behind Alta Equipment Group and Shimmick Common 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.