Correlation Between GATX and McGrath RentCorp
Can any of the company-specific risk be diversified away by investing in both GATX and McGrath RentCorp 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 McGrath RentCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GATX Corporation and McGrath RentCorp, you can compare the effects of market volatilities on GATX and McGrath RentCorp 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 McGrath RentCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GATX and McGrath RentCorp.
Diversification Opportunities for GATX and McGrath RentCorp
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GATX and McGrath is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and McGrath RentCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McGrath RentCorp 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 McGrath RentCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McGrath RentCorp has no effect on the direction of GATX i.e., GATX and McGrath RentCorp go up and down completely randomly.
Pair Corralation between GATX and McGrath RentCorp
Given the investment horizon of 90 days GATX Corporation is expected to generate 0.98 times more return on investment than McGrath RentCorp. However, GATX Corporation is 1.02 times less risky than McGrath RentCorp. It trades about 0.09 of its potential returns per unit of risk. McGrath RentCorp is currently generating about 0.0 per unit of risk. If you would invest 12,574 in GATX Corporation on August 27, 2024 and sell it today you would earn a total of 3,585 from holding GATX Corporation or generate 28.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GATX Corp. vs. McGrath RentCorp
Performance |
| Timeline |
| GATX |
| McGrath RentCorp |
GATX and McGrath RentCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GATX and McGrath RentCorp
The main advantage of trading using opposite GATX and McGrath RentCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GATX position performs unexpectedly, McGrath RentCorp 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 McGrath RentCorp will offset losses from the drop in McGrath RentCorp's 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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