Correlation Between Jeld Wen and GATX
Can any of the company-specific risk be diversified away by investing in both Jeld Wen 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 Jeld Wen and GATX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeld Wen Holding and GATX Corporation, you can compare the effects of market volatilities on Jeld Wen 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 Jeld Wen with a short position of GATX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeld Wen and GATX.
Diversification Opportunities for Jeld Wen and GATX
Average diversification
The 3 months correlation between Jeld and GATX is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and GATX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GATX and Jeld Wen 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 Jeld Wen Holding 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 Jeld Wen i.e., Jeld Wen and GATX go up and down completely randomly.
Pair Corralation between Jeld Wen and GATX
Given the investment horizon of 90 days Jeld Wen Holding is expected to under-perform the GATX. In addition to that, Jeld Wen is 7.72 times more volatile than GATX Corporation. It trades about -0.36 of its total potential returns per unit of risk. GATX Corporation is currently generating about -0.14 per unit of volatility. If you would invest 16,555 in GATX Corporation on November 27, 2024 and sell it today you would lose (368.00) from holding GATX Corporation or give up 2.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Jeld Wen Holding vs. GATX Corp.
Performance |
Timeline |
Jeld Wen Holding |
GATX |
Jeld Wen and GATX Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jeld Wen and GATX
The main advantage of trading using opposite Jeld Wen and GATX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeld Wen 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.Jeld Wen vs. Gibraltar Industries | ||
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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