Correlation Between Alta Equipment and Triton International

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

Diversification Opportunities for Alta Equipment and Triton International

0.26

Correlation Coefficient

Alta Equipment  Triton International

Modest diversification

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

Pair Corralation between Alta Equipment and Triton International

Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the Triton International. In addition to that, Alta Equipment is 10.66 times more volatile than Triton International Limited. It trades about -0.3 of its total potential returns per unit of risk. Triton International Limited is currently generating about 0.16 per unit of volatility. If you would invest  2,495  in Triton International Limited on October 1, 2024 and sell it today you would earn a total of  20.00  from holding Triton International Limited or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Alta Equipment Group  vs.  Triton International Limited

Alta Equipment Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Alta Equipment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Triton International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Triton International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alta Equipment and Triton International

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

The idea behind Alta Equipment Group and Triton International Limited 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.