Correlation Between HE Equipment and GATX
Can any of the company-specific risk be diversified away by investing in both HE Equipment and GATX 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 HE Equipment and GATX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and GATX Corporation, you can compare the effects of market volatilities on HE Equipment and GATX 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 HE Equipment with a short position of GATX. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and GATX.
Diversification Opportunities for HE Equipment and GATX
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEES and GATX is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and GATX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GATX and HE Equipment 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 HE Equipment Services are associated (or correlated) with GATX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GATX has no effect on the direction of HE Equipment i.e., HE Equipment and GATX go up and down completely randomly.
Pair Corralation between HE Equipment and GATX
Given the investment horizon of 90 days HE Equipment Services is expected to generate 1.78 times more return on investment than GATX. However, HE Equipment is 1.78 times more volatile than GATX Corporation. It trades about 0.04 of its potential returns per unit of risk. GATX Corporation is currently generating about 0.06 per unit of risk. If you would invest 4,113 in HE Equipment Services on August 23, 2024 and sell it today you would earn a total of 1,555 from holding HE Equipment Services or generate 37.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. GATX Corp.
Performance |
| Timeline |
| HE Equipment Services |
| GATX |
HE Equipment and GATX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and GATX
The main advantage of trading using opposite HE Equipment and GATX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, GATX 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 GATX will offset losses from the drop in GATX's long position.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
| GATX vs. Custom Truck One | GATX vs. HE Equipment Services | GATX vs. Alta Equipment Group | GATX vs. McGrath RentCorp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |