Correlation Between GATX and Vestis

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

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

Diversification Opportunities for GATX and Vestis

0.51

Correlation Coefficient

GATX  Vestis

Very weak diversification

The 3 months correlation between GATX and Vestis is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of GATX i.e., GATX and Vestis go up and down completely randomly.

Pair Corralation between GATX and Vestis

Given the investment horizon of 90 days GATX Corporation is expected to under-perform the Vestis. But the stock apears to be less risky and, when comparing its historical volatility, GATX Corporation is 1.31 times less risky than Vestis. The stock trades about -0.26 of its potential returns per unit of risk. The Vestis is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,628  in Vestis on September 24, 2024 and sell it today you would earn a total of  11.00  from holding Vestis or generate 0.68% 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.  Vestis

GATX

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GATX Corporation are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, GATX may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vestis

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Vestis may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GATX and Vestis

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

The idea behind GATX Corporation and Vestis 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 Commodity Directory module to find actively traded commodities issued by global exchanges.