Correlation Between FTAI Infrastructure and Trinity Industries

Can any of the company-specific risk be diversified away by investing in both FTAI Infrastructure and Trinity Industries 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 FTAI Infrastructure and Trinity Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FTAI Infrastructure and Trinity Industries, you can compare the effects of market volatilities on FTAI Infrastructure and Trinity Industries 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 FTAI Infrastructure with a short position of Trinity Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Infrastructure and Trinity Industries.

Diversification Opportunities for FTAI Infrastructure and Trinity Industries

-0.29

Correlation Coefficient

FTAI Infrastructure  Trinity Industries

Very good diversification

The 3 months correlation between FTAI and Trinity is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Infrastructure and Trinity Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Industries and FTAI Infrastructure 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 FTAI Infrastructure are associated (or correlated) with Trinity Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Industries has no effect on the direction of FTAI Infrastructure i.e., FTAI Infrastructure and Trinity Industries go up and down completely randomly.

Pair Corralation between FTAI Infrastructure and Trinity Industries

Considering the 90-day investment horizon FTAI Infrastructure is expected to under-perform the Trinity Industries. In addition to that, FTAI Infrastructure is 1.25 times more volatile than Trinity Industries. It trades about -0.13 of its total potential returns per unit of risk. Trinity Industries is currently generating about 0.05 per unit of volatility. If you would invest  3,419  in Trinity Industries on September 21, 2024 and sell it today you would earn a total of  119.00  from holding Trinity Industries or generate 3.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FTAI Infrastructure  vs.  Trinity Industries

FTAI Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FTAI Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Trinity Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trinity Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Trinity Industries is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FTAI Infrastructure and Trinity Industries

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

The idea behind FTAI Infrastructure and Trinity Industries 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.