Correlation Between Bird Global and Alta Equipment

Can any of the company-specific risk be diversified away by investing in both Bird Global and Alta 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 Bird Global and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Bird Global and Alta Equipment

-0.45

Correlation Coefficient

Bird Global  Alta Equipment

Very good diversification

The 3 months correlation between Bird and Alta is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bird Global and Alta Equipment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Equipment Group and Bird Global 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 Bird Global are associated (or correlated) with Alta Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Equipment Group has no effect on the direction of Bird Global i.e., Bird Global and Alta Equipment go up and down completely randomly.

Pair Corralation between Bird Global and Alta Equipment

Given the investment horizon of 90 days Bird Global is expected to under-perform the Alta Equipment. In addition to that, Bird Global is 4.05 times more volatile than Alta Equipment Group. It trades about -0.05 of its total potential returns per unit of risk. Alta Equipment Group is currently generating about 0.02 per unit of volatility. If you would invest  1,037  in Alta Equipment Group on January 26, 2024 and sell it today you would earn a total of  136.00  from holding Alta Equipment Group or generate 13.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.3%
Values	Daily Returns

Bird Global  vs.  Alta Equipment Group

Bird Global

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Bird Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak fundamental indicators, Bird Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alta Equipment Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alta Equipment Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Alta Equipment may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Bird Global and Alta Equipment

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

The idea behind Bird Global and Alta Equipment Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.