Correlation Between Greenbrier Companies and Trinity Industries

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

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

Diversification Opportunities for Greenbrier Companies and Trinity Industries

0.98

Correlation Coefficient

Greenbrier Companies  Trinity Industries

Almost no diversification

The 3 months correlation between Greenbrier and Trinity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Greenbrier Companies and Trinity Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Industries 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 Trinity Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Industries has no effect on the direction of Greenbrier Companies i.e., Greenbrier Companies and Trinity Industries go up and down completely randomly.

Pair Corralation between Greenbrier Companies and Trinity Industries

Considering the 90-day investment horizon Greenbrier Companies is expected to generate 0.99 times more return on investment than Trinity Industries. However, Greenbrier Companies is 1.01 times less risky than Trinity Industries. It trades about -0.13 of its potential returns per unit of risk. Trinity Industries is currently generating about -0.16 per unit of risk. If you would invest  6,102  in Greenbrier Companies on December 30, 2024 and sell it today you would lose (910.00) from holding Greenbrier Companies or give up 14.91% of portfolio value over 90 days.

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

Greenbrier Companies  vs.  Trinity Industries

Greenbrier Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greenbrier Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Trinity Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trinity Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Greenbrier Companies and Trinity Industries

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

The idea behind Greenbrier Companies and Trinity 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.