Correlation Between First Tractor and Textainer Group

Can any of the company-specific risk be diversified away by investing in both First Tractor and Textainer Group 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 First Tractor and Textainer Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for First Tractor and Textainer Group

0.15

Correlation Coefficient

First Tractor  Textainer Group

Average diversification

The 3 months correlation between First and Textainer is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding First Tractor and Textainer Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textainer Group Holdings and First Tractor 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 First Tractor are associated (or correlated) with Textainer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textainer Group Holdings has no effect on the direction of First Tractor i.e., First Tractor and Textainer Group go up and down completely randomly.

Pair Corralation between First Tractor and Textainer Group

Assuming the 90 days horizon First Tractor is expected to generate 0.92 times more return on investment than Textainer Group. However, First Tractor is 1.09 times less risky than Textainer Group. It trades about 0.13 of its potential returns per unit of risk. Textainer Group Holdings is currently generating about 0.02 per unit of risk. If you would invest  63.00  in First Tractor on December 30, 2024 and sell it today you would earn a total of  18.00  from holding First Tractor or generate 28.57% return on investment over 90 days.

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

First Tractor  vs.  Textainer Group Holdings

First Tractor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Tractor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, First Tractor reported solid returns over the last few months and may actually be approaching a breakup point.

Textainer Group Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Textainer Group Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Textainer Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Tractor and Textainer Group

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

The idea behind First Tractor and Textainer Group Holdings 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.