Correlation Between GATX and LCI Industries

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

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

Diversification Opportunities for GATX and LCI Industries

0.3

Correlation Coefficient

GATX  LCI Industries

Weak diversification

The 3 months correlation between GATX and LCI is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and LCI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCI Industries 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 LCI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LCI Industries has no effect on the direction of GATX i.e., GATX and LCI Industries go up and down completely randomly.

Pair Corralation between GATX and LCI Industries

Given the investment horizon of 90 days GATX Corporation is expected to generate 0.69 times more return on investment than LCI Industries. However, GATX Corporation is 1.45 times less risky than LCI Industries. It trades about 0.0 of its potential returns per unit of risk. LCI Industries is currently generating about -0.12 per unit of risk. If you would invest  16,357  in GATX Corporation on November 29, 2024 and sell it today you would lose (29.00) from holding GATX Corporation or give up 0.18% of portfolio value over 90 days.

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

GATX Corp.  vs.  LCI Industries

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.

LCI Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days LCI Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with GATX and LCI Industries

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

The idea behind GATX Corporation and LCI 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.