Correlation Between Textainer Group and Alamo

Can any of the company-specific risk be diversified away by investing in both Textainer Group and Alamo 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 Alamo 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 Alamo Group, you can compare the effects of market volatilities on Textainer Group and Alamo 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 Alamo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Textainer Group and Alamo.

Diversification Opportunities for Textainer Group and Alamo

0.45

Correlation Coefficient

Textainer Group  Alamo

Very weak diversification

The 3 months correlation between Textainer and Alamo is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Textainer Group Holdings and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Group 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 Alamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Group has no effect on the direction of Textainer Group i.e., Textainer Group and Alamo go up and down completely randomly.

Pair Corralation between Textainer Group and Alamo

Assuming the 90 days horizon Textainer Group Holdings is expected to generate 2.78 times more return on investment than Alamo. However, Textainer Group is 2.78 times more volatile than Alamo Group. It trades about 0.02 of its potential returns per unit of risk. Alamo Group is currently generating about 0.01 per unit of risk. If you would invest  76.00  in Textainer Group Holdings on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Textainer Group Holdings or generate 0.0% return on investment over 90 days.

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

Textainer Group Holdings  vs.  Alamo Group

Textainer Group Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Textainer Group Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Textainer Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alamo Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alamo Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Alamo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Textainer Group and Alamo

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

The idea behind Textainer Group Holdings and Alamo 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.