Correlation Between Ryder System and Ashtead Group

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

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

Diversification Opportunities for Ryder System and Ashtead Group

0.69

Correlation Coefficient

Ryder System  Ashtead Group

Poor diversification

The 3 months correlation between Ryder and Ashtead is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ryder System 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 Ryder System 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 Ryder System 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 Ryder System i.e., Ryder System and Ashtead Group go up and down completely randomly.

Pair Corralation between Ryder System and Ashtead Group

Taking into account the 90-day investment horizon Ryder System is expected to under-perform the Ashtead Group. But the stock apears to be less risky and, when comparing its historical volatility, Ryder System is 1.39 times less risky than Ashtead Group. The stock trades about -0.08 of its potential returns per unit of risk. The Ashtead Group plc is currently generating about -0.04 of returns per unit of risk over similar time horizon. 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

Ryder System  vs.  Ashtead Group plc

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.

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 Ryder System and Ashtead Group

The main advantage of trading using opposite Ryder System and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryder System 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 Ryder System 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.