Correlation Between GATX and Jeld Wen

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

By analyzing existing cross correlation between GATX Corporation and Jeld Wen Holding, you can compare the effects of market volatilities on GATX and Jeld Wen 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 GATX with a short position of Jeld Wen. Check out your portfolio center. Please also check ongoing floating volatility patterns of GATX and Jeld Wen.

Diversification Opportunities for GATX and Jeld Wen

0.09

Correlation Coefficient

GATX  Jeld Wen

Significant diversification

The 3 months correlation between GATX and Jeld is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen Holding and GATX 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 GATX Corporation are associated (or correlated) with Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of GATX i.e., GATX and Jeld Wen go up and down completely randomly.

Pair Corralation between GATX and Jeld Wen

Given the investment horizon of 90 days GATX Corporation is expected to generate 0.13 times more return on investment than Jeld Wen. However, GATX Corporation is 7.65 times less risky than Jeld Wen. It trades about -0.09 of its potential returns per unit of risk. Jeld Wen Holding is currently generating about -0.33 per unit of risk. If you would invest  16,575  in GATX Corporation on November 29, 2024 and sell it today you would lose (247.00) from holding GATX Corporation or give up 1.49% of portfolio value over 90 days.

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

GATX Corp.  vs.  Jeld Wen Holding

GATX

Risk-Adjusted Performance

Very Weak

Over the last 90 days GATX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GATX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Jeld Wen Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jeld Wen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with GATX and Jeld Wen

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

The idea behind GATX Corporation and Jeld Wen Holding 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.