Correlation Between Textainer Group and CEA Industries

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

Diversification Opportunities for Textainer Group and CEA Industries

0.21

Correlation Coefficient

Textainer Group  CEA Industries

Modest diversification

The 3 months correlation between Textainer and CEA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Textainer Group Holdings and CEA Industries Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEA Industries Warrant 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 CEA Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEA Industries Warrant has no effect on the direction of Textainer Group i.e., Textainer Group and CEA Industries go up and down completely randomly.

Pair Corralation between Textainer Group and CEA Industries

Assuming the 90 days horizon Textainer Group is expected to generate 300.47 times less return on investment than CEA Industries. But when comparing it to its historical volatility, Textainer Group Holdings is 32.34 times less risky than CEA Industries. It trades about 0.02 of its potential returns per unit of risk. CEA Industries Warrant is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.00  in CEA Industries Warrant on December 5, 2024 and sell it today you would earn a total of  2.50  from holding CEA Industries Warrant or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	59.02%
Values	Daily Returns

Textainer Group Holdings  vs.  CEA Industries Warrant

Textainer Group Holdings

Risk-Adjusted Performance

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 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.

CEA Industries Warrant

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEA Industries Warrant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, CEA Industries showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Textainer Group and CEA Industries

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

The idea behind Textainer Group Holdings and CEA Industries Warrant 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.