Correlation Between GATX and Aarons
Can any of the company-specific risk be diversified away by investing in both GATX and Aarons 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 Aarons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GATX Corporation and The Aarons, you can compare the effects of market volatilities on GATX and Aarons 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 Aarons. Check out your portfolio center. Please also check ongoing floating volatility patterns of GATX and Aarons.
Diversification Opportunities for GATX and Aarons
Very weak diversification
The 3 months correlation between GATX and Aarons is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and The Aarons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons 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 Aarons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarons has no effect on the direction of GATX i.e., GATX and Aarons go up and down completely randomly.
Pair Corralation between GATX and Aarons
Given the investment horizon of 90 days GATX Corporation is expected to generate 0.4 times more return on investment than Aarons. However, GATX Corporation is 2.53 times less risky than Aarons. It trades about 0.07 of its potential returns per unit of risk. The Aarons is currently generating about 0.03 per unit of risk. If you would invest 10,700 in GATX Corporation on August 24, 2024 and sell it today you would earn a total of 5,459 from holding GATX Corporation or generate 51.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.57% |
| Values | Daily Returns |
GATX Corp. vs. The Aarons
Performance |
| Timeline |
| GATX |
| Aarons |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
GATX and Aarons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GATX and Aarons
The main advantage of trading using opposite GATX and Aarons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GATX position performs unexpectedly, Aarons 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 Aarons will offset losses from the drop in Aarons' long position.| GATX vs. Custom Truck One | GATX vs. HE Equipment Services | GATX vs. Alta Equipment Group | GATX vs. McGrath RentCorp |
| Aarons vs. Custom Truck One | Aarons vs. PROG Holdings | Aarons vs. McGrath RentCorp | Aarons vs. HE Equipment Services |
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.
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