Correlation Between Alta Equipment and ECN Capital

Can any of the company-specific risk be diversified away by investing in both Alta Equipment and ECN Capital 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 ECN Capital 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 ECN Capital Corp, you can compare the effects of market volatilities on Alta Equipment and ECN Capital 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 ECN Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and ECN Capital.

Diversification Opportunities for Alta Equipment and ECN Capital

0.52

Correlation Coefficient

Alta Equipment  ECN Capital

Very weak diversification

The 3 months correlation between Alta and ECN is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and ECN Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECN Capital Corp 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 ECN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECN Capital Corp has no effect on the direction of Alta Equipment i.e., Alta Equipment and ECN Capital go up and down completely randomly.

Pair Corralation between Alta Equipment and ECN Capital

Given the investment horizon of 90 days Alta Equipment Group is expected to generate 2.02 times more return on investment than ECN Capital. However, Alta Equipment is 2.02 times more volatile than ECN Capital Corp. It trades about 0.18 of its potential returns per unit of risk. ECN Capital Corp is currently generating about 0.07 per unit of risk. If you would invest  480.00  in Alta Equipment Group on May 4, 2025 and sell it today you would earn a total of  266.00  from holding Alta Equipment Group or generate 55.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Alta Equipment Group  vs.  ECN Capital Corp

Alta Equipment Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Alta Equipment reported solid returns over the last few months and may actually be approaching a breakup point.

ECN Capital Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ECN Capital Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ECN Capital may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Alta Equipment and ECN Capital

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

The idea behind Alta Equipment Group and ECN Capital Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.