Correlation Between GATX and Willscot Mobile

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

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

Diversification Opportunities for GATX and Willscot Mobile

0.63

Correlation Coefficient

GATX  Willscot Mobile

Poor diversification

The 3 months correlation between GATX and Willscot is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and Willscot Mobile Mini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willscot Mobile Mini 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 Willscot Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willscot Mobile Mini has no effect on the direction of GATX i.e., GATX and Willscot Mobile go up and down completely randomly.

Pair Corralation between GATX and Willscot Mobile

Given the investment horizon of 90 days GATX Corporation is expected to generate 0.3 times more return on investment than Willscot Mobile. However, GATX Corporation is 3.36 times less risky than Willscot Mobile. It trades about -0.09 of its potential returns per unit of risk. Willscot Mobile Mini is currently generating about -0.14 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	Significant
Accuracy	100.0%
Values	Daily Returns

GATX Corp.  vs.  Willscot Mobile Mini

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.

Willscot Mobile Mini

Risk-Adjusted Performance

Very Weak

Over the last 90 days Willscot Mobile Mini has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with GATX and Willscot Mobile

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

The idea behind GATX Corporation and Willscot Mobile Mini 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.