Correlation Between Textainer Group and GATX

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

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

Diversification Opportunities for Textainer Group and GATX

0.94

Correlation Coefficient

Textainer Group  GATX

Almost no diversification

The 3 months correlation between Textainer and GATX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Textainer Group Holdings and GATX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GATX and Textainer Group 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 Textainer Group Holdings 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 Textainer Group i.e., Textainer Group and GATX go up and down completely randomly.

Pair Corralation between Textainer Group and GATX

Considering the 90-day investment horizon Textainer Group Holdings is expected to generate 1.09 times more return on investment than GATX. However, Textainer Group is 1.09 times more volatile than GATX Corporation. It trades about 0.14 of its potential returns per unit of risk. GATX Corporation is currently generating about 0.06 per unit of risk. If you would invest  3,069  in Textainer Group Holdings on September 22, 2024 and sell it today you would earn a total of  1,022  from holding Textainer Group Holdings or generate 33.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	28.23%
Values	Daily Returns

Textainer Group Holdings  vs.  GATX Corp.

Textainer Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Textainer Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Textainer Group is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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.

Pair Trading with Textainer Group and GATX

The main advantage of trading using opposite Textainer Group and GATX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Textainer Group 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 Textainer Group Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.