Correlation Between PROG Holdings and Ashtead Group

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

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

Diversification Opportunities for PROG Holdings and Ashtead Group

0.8

Correlation Coefficient

PROG Holdings  Ashtead Group

Very poor diversification

The 3 months correlation between PROG and Ashtead is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PROG Holdings and Ashtead Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group plc and PROG Holdings 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 PROG Holdings are associated (or correlated) with Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group plc has no effect on the direction of PROG Holdings i.e., PROG Holdings and Ashtead Group go up and down completely randomly.

Pair Corralation between PROG Holdings and Ashtead Group

Considering the 90-day investment horizon PROG Holdings is expected to under-perform the Ashtead Group. In addition to that, PROG Holdings is 1.69 times more volatile than Ashtead Group plc. It trades about -0.14 of its total potential returns per unit of risk. Ashtead Group plc is currently generating about -0.03 per unit of volatility. If you would invest  6,209  in Ashtead Group plc on December 25, 2024 and sell it today you would lose (384.00) from holding Ashtead Group plc or give up 6.18% of portfolio value over 90 days.

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

PROG Holdings  vs.  Ashtead Group plc

PROG Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PROG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with PROG Holdings and Ashtead Group

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

The idea behind PROG Holdings and Ashtead Group plc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.