Correlation Between Ashtead Group and Ryder System

Can any of the company-specific risk be diversified away by investing in both Ashtead Group and Ryder System 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 Ashtead Group and Ryder System into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ashtead Group plc and Ryder System, you can compare the effects of market volatilities on Ashtead Group and Ryder System 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 Ashtead Group with a short position of Ryder System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Group and Ryder System.

Diversification Opportunities for Ashtead Group and Ryder System

0.69

Correlation Coefficient

Ashtead Group  Ryder System

Poor diversification

The 3 months correlation between Ashtead and Ryder is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Group plc and Ryder System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryder System and Ashtead Group 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 Ashtead Group plc are associated (or correlated) with Ryder System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryder System has no effect on the direction of Ashtead Group i.e., Ashtead Group and Ryder System go up and down completely randomly.

Pair Corralation between Ashtead Group and Ryder System

Assuming the 90 days horizon Ashtead Group plc is expected to generate 1.39 times more return on investment than Ryder System. However, Ashtead Group is 1.39 times more volatile than Ryder System. It trades about -0.04 of its potential returns per unit of risk. Ryder System is currently generating about -0.08 per unit of risk. If you would invest  6,155  in Ashtead Group plc on December 27, 2024 and sell it today you would lose (463.00) from holding Ashtead Group plc or give up 7.52% of portfolio value over 90 days.

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

Ashtead Group plc  vs.  Ryder System

Ashtead Group plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashtead Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ashtead Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ryder System

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ryder System has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Ashtead Group and Ryder System

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

The idea behind Ashtead Group plc and Ryder System 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.