Correlation Between Textainer Group and Porsche Automobil

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

Diversification Opportunities for Textainer Group and Porsche Automobil

-0.14

Correlation Coefficient

Textainer Group  Porsche Automobil

Good diversification

The 3 months correlation between Textainer and Porsche is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Textainer Group Holdings and Porsche Automobil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porsche Automobil Holding 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 Porsche Automobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porsche Automobil Holding has no effect on the direction of Textainer Group i.e., Textainer Group and Porsche Automobil go up and down completely randomly.

Pair Corralation between Textainer Group and Porsche Automobil

Assuming the 90 days horizon Textainer Group Holdings is expected to under-perform the Porsche Automobil. In addition to that, Textainer Group is 1.99 times more volatile than Porsche Automobil Holding. It trades about -0.01 of its total potential returns per unit of risk. Porsche Automobil Holding is currently generating about 0.13 per unit of volatility. If you would invest  3,560  in Porsche Automobil Holding on November 28, 2024 and sell it today you would earn a total of  561.00  from holding Porsche Automobil Holding or generate 15.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Textainer Group Holdings  vs.  Porsche Automobil Holding

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.

Porsche Automobil Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Porsche Automobil Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Porsche Automobil reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Textainer Group and Porsche Automobil

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

The idea behind Textainer Group Holdings and Porsche Automobil Holding 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.