Correlation Between Capital Southwest and GATX

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Capital Southwest 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 Capital Southwest and GATX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Southwest and GATX Corporation, you can compare the effects of market volatilities on Capital Southwest 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 Capital Southwest with a short position of GATX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Southwest and GATX.

Diversification Opportunities for Capital Southwest and GATX

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Capital and GATX is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Capital Southwest and GATX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GATX and Capital Southwest 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 Capital Southwest 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 Capital Southwest i.e., Capital Southwest and GATX go up and down completely randomly.

Pair Corralation between Capital Southwest and GATX

Given the investment horizon of 90 days Capital Southwest is expected to generate 1.58 times less return on investment than GATX. In addition to that, Capital Southwest is 1.23 times more volatile than GATX Corporation. It trades about 0.2 of its total potential returns per unit of risk. GATX Corporation is currently generating about 0.38 per unit of volatility. If you would invest  12,438  in GATX Corporation on December 29, 2023 and sell it today you would earn a total of  965.00  from holding GATX Corporation or generate 7.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Capital Southwest  vs.  GATX Corp.

 Performance 
       Timeline  
Capital Southwest 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Capital Southwest are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Capital Southwest may actually be approaching a critical reversion point that can send shares even higher in April 2024.
GATX 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in GATX Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, GATX may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Capital Southwest and GATX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Capital Southwest and GATX

The main advantage of trading using opposite Capital Southwest and GATX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Southwest 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 Capital Southwest 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.
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

Other Complementary Tools

Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Money Managers
Screen money managers from public funds and ETFs managed around the world
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital