Correlation Between Canlan Ice and Alta Equipment

Can any of the company-specific risk be diversified away by investing in both Canlan Ice and Alta Equipment 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 Canlan Ice and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canlan Ice Sports and Alta Equipment Group, you can compare the effects of market volatilities on Canlan Ice and Alta Equipment 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 Canlan Ice with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Alta Equipment.

Diversification Opportunities for Canlan Ice and Alta Equipment

-0.16

Correlation Coefficient

Canlan Ice  Alta Equipment

Good diversification

The 3 months correlation between Canlan and Alta is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Alta Equipment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Equipment Group and Canlan Ice 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 Canlan Ice Sports are associated (or correlated) with Alta Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Equipment Group has no effect on the direction of Canlan Ice i.e., Canlan Ice and Alta Equipment go up and down completely randomly.

Pair Corralation between Canlan Ice and Alta Equipment

Assuming the 90 days horizon Canlan Ice is expected to generate 4.85 times less return on investment than Alta Equipment. But when comparing it to its historical volatility, Canlan Ice Sports is 13.99 times less risky than Alta Equipment. It trades about 0.23 of its potential returns per unit of risk. Alta Equipment Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  701.00  in Alta Equipment Group on October 26, 2024 and sell it today you would earn a total of  28.50  from holding Alta Equipment Group or generate 4.07% return on investment over 90 days.

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

Canlan Ice Sports  vs.  Alta Equipment Group

Canlan Ice Sports

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Alta Equipment Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 4 (%) 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.

Pair Trading with Canlan Ice and Alta Equipment

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

The idea behind Canlan Ice Sports and Alta Equipment Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.