Correlation Between Greenbrier Companies and Canadian Pacific
Can any of the company-specific risk be diversified away by investing in both Greenbrier Companies and Canadian Pacific 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 Greenbrier Companies and Canadian Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greenbrier Companies and Canadian Pacific Railway, you can compare the effects of market volatilities on Greenbrier Companies and Canadian Pacific 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 Greenbrier Companies with a short position of Canadian Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greenbrier Companies and Canadian Pacific.
Diversification Opportunities for Greenbrier Companies and Canadian Pacific
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Greenbrier and Canadian is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Greenbrier Companies and Canadian Pacific Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Pacific Railway and Greenbrier Companies 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 Greenbrier Companies are associated (or correlated) with Canadian Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Pacific Railway has no effect on the direction of Greenbrier Companies i.e., Greenbrier Companies and Canadian Pacific go up and down completely randomly.
Pair Corralation between Greenbrier Companies and Canadian Pacific
Considering the 90-day investment horizon Greenbrier Companies is expected to generate 1.91 times more return on investment than Canadian Pacific. However, Greenbrier Companies is 1.91 times more volatile than Canadian Pacific Railway. It trades about 0.17 of its potential returns per unit of risk. Canadian Pacific Railway is currently generating about -0.05 per unit of risk. If you would invest 4,855 in Greenbrier Companies on November 1, 2024 and sell it today you would earn a total of 1,791 from holding Greenbrier Companies or generate 36.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greenbrier Companies vs. Canadian Pacific Railway
Performance |
| Timeline |
| Greenbrier Companies |
| Canadian Pacific Railway |
Greenbrier Companies and Canadian Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greenbrier Companies and Canadian Pacific
The main advantage of trading using opposite Greenbrier Companies and Canadian Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greenbrier Companies position performs unexpectedly, Canadian Pacific 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 Canadian Pacific will offset losses from the drop in Canadian Pacific's long position.| Greenbrier Companies vs. LB Foster | Greenbrier Companies vs. Freightcar America | Greenbrier Companies vs. Westinghouse Air Brake | Greenbrier Companies vs. CSX Corporation |
| Canadian Pacific vs. Union Pacific | Canadian Pacific vs. CSX Corporation | Canadian Pacific vs. Norfolk Southern | Canadian Pacific vs. Westinghouse Air Brake |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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