Correlation Between GATX and FlexShopper

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

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

Diversification Opportunities for GATX and FlexShopper

0.03

Correlation Coefficient

GATX  FlexShopper

Significant diversification

The 3 months correlation between GATX and FlexShopper is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and FlexShopper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShopper 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 FlexShopper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShopper has no effect on the direction of GATX i.e., GATX and FlexShopper go up and down completely randomly.

Pair Corralation between GATX and FlexShopper

Given the investment horizon of 90 days GATX Corporation is expected to generate 0.21 times more return on investment than FlexShopper. However, GATX Corporation is 4.7 times less risky than FlexShopper. It trades about -0.15 of its potential returns per unit of risk. FlexShopper is currently generating about -0.13 per unit of risk. If you would invest  13,138  in GATX Corporation on January 26, 2024 and sell it today you would lose (555.00) from holding GATX Corporation or give up 4.22% of portfolio value over 90 days.

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

GATX Corp.  vs.  FlexShopper

GATX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GATX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GATX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

FlexShopper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShopper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with GATX and FlexShopper

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

The idea behind GATX Corporation and FlexShopper 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.