Correlation Between Ioneer and Alta Equipment

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

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

Diversification Opportunities for Ioneer and Alta Equipment

-0.23

Correlation Coefficient

Ioneer  Alta Equipment

Very good diversification

The 3 months correlation between Ioneer and Alta is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ioneer Ltd American 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 Ioneer 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 ioneer Ltd American 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 Ioneer i.e., Ioneer and Alta Equipment go up and down completely randomly.

Pair Corralation between Ioneer and Alta Equipment

Given the investment horizon of 90 days ioneer Ltd American is expected to generate 1.86 times more return on investment than Alta Equipment. However, Ioneer is 1.86 times more volatile than Alta Equipment Group. It trades about 0.17 of its potential returns per unit of risk. Alta Equipment Group is currently generating about 0.09 per unit of risk. If you would invest  434.00  in ioneer Ltd American on October 26, 2024 and sell it today you would earn a total of  77.00  from holding ioneer Ltd American or generate 17.74% return on investment over 90 days.

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

ioneer Ltd American  vs.  Alta Equipment Group

ioneer American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ioneer Ltd American has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Alta Equipment Group

Risk-Adjusted Performance

4 of 100

OK

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 Ioneer and Alta Equipment

The main advantage of trading using opposite Ioneer and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ioneer 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 ioneer Ltd American 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.