Correlation Between Triton International and GATX

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

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

Diversification Opportunities for Triton International and GATX

0.36

Correlation Coefficient

Triton International  GATX

Weak diversification

The 3 months correlation between Triton and GATX is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited and GATX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GATX and Triton International 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 Triton International Limited are associated (or correlated) with GATX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GATX has no effect on the direction of Triton International i.e., Triton International and GATX go up and down completely randomly.

Pair Corralation between Triton International and GATX

Assuming the 90 days trading horizon Triton International is expected to generate 11.33 times less return on investment than GATX. But when comparing it to its historical volatility, Triton International Limited is 7.74 times less risky than GATX. It trades about 0.14 of its potential returns per unit of risk. GATX Corporation is currently generating about 0.2 of returns per unit of risk over similar time horizon. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Triton International Limited  vs.  GATX Corp.

Triton International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Triton International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Triton International and GATX

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

The idea behind Triton International Limited and GATX Corporation 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.