Correlation Between Triton International and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Triton International and HE 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 Triton International and HE Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triton International Limited and HE Equipment Services, you can compare the effects of market volatilities on Triton International and HE 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 Triton International with a short position of HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triton International and HE Equipment.
Diversification Opportunities for Triton International and HE Equipment
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Triton and HEES is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services and Triton International 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 Triton International Limited are associated (or correlated) with HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Triton International i.e., Triton International and HE Equipment go up and down completely randomly.
Pair Corralation between Triton International and HE Equipment
Assuming the 90 days trading horizon Triton International is expected to generate 76.42 times less return on investment than HE Equipment. But when comparing it to its historical volatility, Triton International Limited is 27.03 times less risky than HE Equipment. It trades about 0.03 of its potential returns per unit of risk. HE Equipment Services is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,187 in HE Equipment Services on December 10, 2024 and sell it today you would earn a total of 5,153 from holding HE Equipment Services or generate 123.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Triton International Limited vs. HE Equipment Services
Performance |
Timeline |
Triton International |
HE Equipment Services |
Triton International and HE Equipment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Triton International and HE Equipment
The main advantage of trading using opposite Triton International and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International position performs unexpectedly, HE 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 HE Equipment will offset losses from the drop in HE Equipment's long position.Triton International vs. Triton International Limited | Triton International vs. Triton International Limited | Triton International vs. Triton International Limited | Triton International vs. Costamare |
HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
Check out your portfolio center.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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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