Correlation Between Alta Equipment and First Financial
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and First Financial 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 Alta Equipment and First Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alta Equipment Group and First Financial, you can compare the effects of market volatilities on Alta Equipment and First Financial 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 Alta Equipment with a short position of First Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and First Financial.
Diversification Opportunities for Alta Equipment and First Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alta and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and First Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial has no effect on the direction of Alta Equipment i.e., Alta Equipment and First Financial go up and down completely randomly.
Pair Corralation between Alta Equipment and First Financial
Given the investment horizon of 90 days Alta Equipment Group is expected to generate 2.57 times more return on investment than First Financial. However, Alta Equipment is 2.57 times more volatile than First Financial. It trades about 0.16 of its potential returns per unit of risk. First Financial is currently generating about 0.13 per unit of risk. If you would invest 632.00 in Alta Equipment Group on May 31, 2025 and sell it today you would earn a total of 202.00 from holding Alta Equipment Group or generate 31.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. First Financial
Performance |
| Timeline |
| Alta Equipment Group |
| First Financial |
Alta Equipment and First Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and First Financial
The main advantage of trading using opposite Alta Equipment and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, First Financial 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 First Financial will offset losses from the drop in First Financial's long position.| Alta Equipment vs. Custom Truck One | Alta Equipment vs. PROG Holdings | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Enerpac Tool Group |
| First Financial vs. 1st Source | First Financial vs. Great Southern Bancorp | First Financial vs. Waterstone Financial | First Financial vs. Community Trust Bancorp |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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