Correlation Between Arts Way and Textainer Group

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

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

Diversification Opportunities for Arts Way and Textainer Group

-0.6

Correlation Coefficient

Arts Way  Textainer Group

Excellent diversification

The 3 months correlation between Arts and Textainer is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Arts Way Manufacturing Co and Textainer Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textainer Group Holdings and Arts Way 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 Arts Way Manufacturing Co are associated (or correlated) with Textainer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textainer Group Holdings has no effect on the direction of Arts Way i.e., Arts Way and Textainer Group go up and down completely randomly.

Pair Corralation between Arts Way and Textainer Group

Given the investment horizon of 90 days Arts Way Manufacturing Co is expected to under-perform the Textainer Group. But the stock apears to be less risky and, when comparing its historical volatility, Arts Way Manufacturing Co is 1.71 times less risky than Textainer Group. The stock trades about -0.1 of its potential returns per unit of risk. The Textainer Group Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  74.00  in Textainer Group Holdings on September 3, 2024 and sell it today you would earn a total of  10.00  from holding Textainer Group Holdings or generate 13.51% return on investment over 90 days.

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

Arts Way Manufacturing Co  vs.  Textainer Group Holdings

Arts Way Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arts Way Manufacturing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Textainer Group Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Textainer Group Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Textainer Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arts Way and Textainer Group

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

The idea behind Arts Way Manufacturing Co and Textainer Group Holdings 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 Stocks Directory module to find actively traded stocks across global markets.