Correlation Between Jeld Wen and GATX

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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

JeldGATXDiversified AwayJeldGATXDiversified Away100%
0.1
  Correlation Coefficient

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 Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Jeld Wen Holding  vs.  GATX Corp.

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -25-20-15-10-50510
JavaScript chart by amCharts 3.21.15JELD GATX
       Timeline  
Jeld Wen Holding 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Jeld Wen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb67891011
GATX 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days GATX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GATX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb150155160165

Jeld Wen and GATX Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.64-5.72-3.8-1.89-0.0271.563.184.86.428.03 0.050.100.150.20
JavaScript chart by amCharts 3.21.15JELD GATX
       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.
The idea behind Jeld Wen Holding and GATX Corporation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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