Correlation Between GATX and Compania Cervecerias
Can any of the company-specific risk be diversified away by investing in both GATX and Compania Cervecerias 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 Compania Cervecerias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GATX Corporation and Compania Cervecerias Unidas, you can compare the effects of market volatilities on GATX and Compania Cervecerias 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 Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of GATX and Compania Cervecerias.
Diversification Opportunities for GATX and Compania Cervecerias
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GATX and Compania is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias 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 Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of GATX i.e., GATX and Compania Cervecerias go up and down completely randomly.
Pair Corralation between GATX and Compania Cervecerias
Given the investment horizon of 90 days GATX Corporation is expected to generate 0.99 times more return on investment than Compania Cervecerias. However, GATX Corporation is 1.01 times less risky than Compania Cervecerias. It trades about 0.09 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.02 per unit of risk. If you would invest 11,581 in GATX Corporation on November 9, 2024 and sell it today you would earn a total of 5,064 from holding GATX Corporation or generate 43.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GATX Corp. vs. Compania Cervecerias Unidas
Performance |
| Timeline |
| GATX |
| Compania Cervecerias |
GATX and Compania Cervecerias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GATX and Compania Cervecerias
The main advantage of trading using opposite GATX and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GATX position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.| GATX vs. Custom Truck One | GATX vs. HE Equipment Services | GATX vs. Alta Equipment Group | GATX vs. McGrath RentCorp |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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