Correlation Between GATX and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both GATX and Alta Equipment 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 Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GATX Corporation and Alta Equipment Group, you can compare the effects of market volatilities on GATX and Alta Equipment 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 Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GATX and Alta Equipment.
Diversification Opportunities for GATX and Alta Equipment
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GATX and Alta is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and Alta Equipment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Equipment Group 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 Alta Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Equipment Group has no effect on the direction of GATX i.e., GATX and Alta Equipment go up and down completely randomly.
Pair Corralation between GATX and Alta Equipment
Given the investment horizon of 90 days GATX is expected to generate 1.46 times less return on investment than Alta Equipment. But when comparing it to its historical volatility, GATX Corporation is 1.84 times less risky than Alta Equipment. It trades about 0.03 of its potential returns per unit of risk. Alta Equipment Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,128 in Alta Equipment Group on December 29, 2023 and sell it today you would earn a total of 161.00 from holding Alta Equipment Group or generate 14.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
GATX Corp. vs. Alta Equipment Group
Performance |
Timeline |
GATX |
Alta Equipment Group |
GATX and Alta Equipment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GATX and Alta Equipment
The main advantage of trading using opposite GATX and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GATX position performs unexpectedly, Alta Equipment 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 Alta Equipment will offset losses from the drop in Alta Equipment's long position.GATX vs. Ryder System | GATX vs. Vestis | GATX vs. Triton International Limited | GATX vs. Triton International Limited |
Alta Equipment vs. Ryder System | Alta Equipment vs. Vestis | Alta Equipment vs. Triton International Limited | Alta Equipment vs. Triton International Limited |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |