Correlation Between Alta Equipment and Willis Lease
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Willis Lease 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 Willis Lease 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 Willis Lease Finance, you can compare the effects of market volatilities on Alta Equipment and Willis Lease 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 Willis Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Willis Lease.
Diversification Opportunities for Alta Equipment and Willis Lease
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alta and Willis is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Willis Lease Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Lease Finance 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 Willis Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willis Lease Finance has no effect on the direction of Alta Equipment i.e., Alta Equipment and Willis Lease go up and down completely randomly.
Pair Corralation between Alta Equipment and Willis Lease
Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the Willis Lease. In addition to that, Alta Equipment is 1.32 times more volatile than Willis Lease Finance. It trades about -0.16 of its total potential returns per unit of risk. Willis Lease Finance is currently generating about -0.02 per unit of volatility. If you would invest 21,145 in Willis Lease Finance on December 1, 2024 and sell it today you would lose (920.00) from holding Willis Lease Finance or give up 4.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alta Equipment Group vs. Willis Lease Finance
Performance |
Timeline |
Alta Equipment Group |
Willis Lease Finance |
Alta Equipment and Willis Lease Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alta Equipment and Willis Lease
The main advantage of trading using opposite Alta Equipment and Willis Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Willis Lease 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 Willis Lease will offset losses from the drop in Willis Lease's long position.Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
Willis Lease vs. Custom Truck One | Willis Lease vs. GATX Corporation | Willis Lease vs. HE Equipment Services | Willis Lease vs. Alta Equipment Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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