Correlation Between Greenbrier Companies and Commercial Vehicle

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

By analyzing existing cross correlation between Greenbrier Companies and Commercial Vehicle Group, you can compare the effects of market volatilities on Greenbrier Companies and Commercial Vehicle 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 Greenbrier Companies with a short position of Commercial Vehicle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greenbrier Companies and Commercial Vehicle.

Diversification Opportunities for Greenbrier Companies and Commercial Vehicle

-0.88

Correlation Coefficient

Greenbrier Companies  Commercial Vehicle

Pay attention - limited upside

The 3 months correlation between Greenbrier and Commercial is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Greenbrier Companies and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle and Greenbrier Companies 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 Greenbrier Companies are associated (or correlated) with Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of Greenbrier Companies i.e., Greenbrier Companies and Commercial Vehicle go up and down completely randomly.

Pair Corralation between Greenbrier Companies and Commercial Vehicle

Considering the 90-day investment horizon Greenbrier Companies is expected to generate 0.26 times more return on investment than Commercial Vehicle. However, Greenbrier Companies is 3.87 times less risky than Commercial Vehicle. It trades about 0.41 of its potential returns per unit of risk. Commercial Vehicle Group is currently generating about -0.12 per unit of risk. If you would invest  5,866  in Greenbrier Companies on September 2, 2024 and sell it today you would earn a total of  934.00  from holding Greenbrier Companies or generate 15.92% return on investment over 90 days.

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

Greenbrier Companies  vs.  Commercial Vehicle Group

Greenbrier Companies

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Greenbrier Companies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Greenbrier Companies showed solid returns over the last few months and may actually be approaching a breakup point.

Commercial Vehicle

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Greenbrier Companies and Commercial Vehicle

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

The idea behind Greenbrier Companies and Commercial Vehicle Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.