Correlation Between Textainer Group and Rev

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

Diversification Opportunities for Textainer Group and Rev

-0.05

Correlation Coefficient

Textainer Group  Rev

Good diversification

The 3 months correlation between Textainer and Rev is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Textainer Group Holdings and Rev Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rev 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 Rev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rev Group has no effect on the direction of Textainer Group i.e., Textainer Group and Rev go up and down completely randomly.

Pair Corralation between Textainer Group and Rev

Assuming the 90 days horizon Textainer Group is expected to generate 3.76 times less return on investment than Rev. In addition to that, Textainer Group is 1.53 times more volatile than Rev Group. It trades about 0.01 of its total potential returns per unit of risk. Rev Group is currently generating about 0.05 per unit of volatility. If you would invest  3,132  in Rev Group on December 28, 2024 and sell it today you would earn a total of  198.00  from holding Rev Group or generate 6.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Textainer Group Holdings  vs.  Rev Group

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.

Rev Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rev Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Rev may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Textainer Group and Rev

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

The idea behind Textainer Group Holdings and Rev 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.