Correlation Between GATX and Textainer Group

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

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

Diversification Opportunities for GATX and Textainer Group

0.7

Correlation Coefficient

GATX  Textainer Group

Poor diversification

The 3 months correlation between GATX and Textainer is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. 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 GATX 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 GATX Corporation 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 GATX i.e., GATX and Textainer Group go up and down completely randomly.

Pair Corralation between GATX and Textainer Group

If you would invest  13,355  in GATX Corporation on September 4, 2024 and sell it today you would earn a total of  3,085  from holding GATX Corporation or generate 23.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

GATX Corp.  vs.  Textainer Group Holdings

GATX

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GATX Corporation are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, GATX showed solid returns over the last few months and may actually be approaching a breakup point.

Textainer Group Holdings

Risk-Adjusted Performance

0 of 100

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 fairly strong technical and fundamental indicators, Textainer Group is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GATX and Textainer Group

The main advantage of trading using opposite GATX and Textainer Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GATX 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 GATX Corporation 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.