Correlation Between GATX and Fortress Transp
Can any of the company-specific risk be diversified away by investing in both GATX and Fortress Transp 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 Fortress Transp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GATX Corporation and Fortress Transp Infra, you can compare the effects of market volatilities on GATX and Fortress Transp 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 Fortress Transp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GATX and Fortress Transp.
Diversification Opportunities for GATX and Fortress Transp
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GATX and Fortress is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and Fortress Transp Infra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Transp Infra 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 Fortress Transp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Transp Infra has no effect on the direction of GATX i.e., GATX and Fortress Transp go up and down completely randomly.
Pair Corralation between GATX and Fortress Transp
Given the investment horizon of 90 days GATX is expected to generate 5.2 times less return on investment than Fortress Transp. But when comparing it to its historical volatility, GATX Corporation is 1.62 times less risky than Fortress Transp. It trades about 0.06 of its potential returns per unit of risk. Fortress Transp Infra is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,708 in Fortress Transp Infra on September 2, 2024 and sell it today you would earn a total of 15,174 from holding Fortress Transp Infra or generate 888.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GATX Corp. vs. Fortress Transp Infra
Performance |
| Timeline |
| GATX |
| Fortress Transp Infra |
GATX and Fortress Transp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GATX and Fortress Transp
The main advantage of trading using opposite GATX and Fortress Transp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GATX position performs unexpectedly, Fortress Transp 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 Fortress Transp will offset losses from the drop in Fortress Transp's long position.| GATX vs. Custom Truck One | GATX vs. HE Equipment Services | GATX vs. Alta Equipment Group | GATX vs. McGrath RentCorp |
| Fortress Transp vs. McGrath RentCorp | Fortress Transp vs. Custom Truck One | Fortress Transp vs. Herc Holdings | Fortress Transp vs. Alta Equipment Group |
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 Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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