Correlation Between Jeld Wen and GATX

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

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

Diversification Opportunities for Jeld Wen and GATX

-0.84

Correlation Coefficient

Jeld Wen  GATX

Pay attention - limited upside

The 3 months correlation between Jeld and GATX is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and GATX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GATX and Jeld Wen 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 Jeld Wen Holding are associated (or correlated) with GATX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GATX has no effect on the direction of Jeld Wen i.e., Jeld Wen and GATX go up and down completely randomly.

Pair Corralation between Jeld Wen and GATX

Given the investment horizon of 90 days Jeld Wen Holding is expected to under-perform the GATX. In addition to that, Jeld Wen is 2.78 times more volatile than GATX Corporation. It trades about -0.05 of its total potential returns per unit of risk. GATX Corporation is currently generating about 0.19 per unit of volatility. If you would invest  13,461  in GATX Corporation on August 31, 2024 and sell it today you would earn a total of  2,909  from holding GATX Corporation or generate 21.61% return on investment over 90 days.

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

Jeld Wen Holding  vs.  GATX Corp.

Jeld Wen Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeld Wen Holding 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 essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GATX

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GATX Corporation are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, GATX showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jeld Wen and GATX

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

The idea behind Jeld Wen Holding and GATX Corporation 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.