Correlation Between GATX and Ryder System

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

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

Diversification Opportunities for GATX and Ryder System

0.47

Correlation Coefficient

GATX  Ryder System

Very weak diversification

The 3 months correlation between GATX and Ryder is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and Ryder System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryder System 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 Ryder System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryder System has no effect on the direction of GATX i.e., GATX and Ryder System go up and down completely randomly.

Pair Corralation between GATX and Ryder System

Given the investment horizon of 90 days GATX Corporation is expected to generate 0.74 times more return on investment than Ryder System. However, GATX Corporation is 1.35 times less risky than Ryder System. It trades about 0.04 of its potential returns per unit of risk. Ryder System is currently generating about -0.08 per unit of risk. If you would invest  15,485  in GATX Corporation on December 27, 2024 and sell it today you would earn a total of  436.00  from holding GATX Corporation or generate 2.82% return on investment over 90 days.

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

GATX Corp.  vs.  Ryder System

GATX

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GATX Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Ryder System

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ryder System has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with GATX and Ryder System

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

The idea behind GATX Corporation and Ryder System 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.