Correlation Between McGrath RentCorp and Triton International
Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp and Triton International 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 McGrath RentCorp and Triton International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McGrath RentCorp and Triton International Limited, you can compare the effects of market volatilities on McGrath RentCorp and Triton International 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 McGrath RentCorp with a short position of Triton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and Triton International.
Diversification Opportunities for McGrath RentCorp and Triton International
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between McGrath and Triton is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding McGrath RentCorp and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International and McGrath RentCorp 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 McGrath RentCorp are associated (or correlated) with Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of McGrath RentCorp i.e., McGrath RentCorp and Triton International go up and down completely randomly.
Pair Corralation between McGrath RentCorp and Triton International
Given the investment horizon of 90 days McGrath RentCorp is expected to generate 7.46 times more return on investment than Triton International. However, McGrath RentCorp is 7.46 times more volatile than Triton International Limited. It trades about 0.12 of its potential returns per unit of risk. Triton International Limited is currently generating about 0.03 per unit of risk. If you would invest 11,626 in McGrath RentCorp on August 30, 2024 and sell it today you would earn a total of 496.00 from holding McGrath RentCorp or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
McGrath RentCorp vs. Triton International Limited
Performance |
| Timeline |
| McGrath RentCorp |
| Triton International |
McGrath RentCorp and Triton International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McGrath RentCorp and Triton International
The main advantage of trading using opposite McGrath RentCorp and Triton International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McGrath RentCorp position performs unexpectedly, Triton International 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 Triton International will offset losses from the drop in Triton International's long position.| McGrath RentCorp vs. MSA Safety | McGrath RentCorp vs. Resideo Technologies | McGrath RentCorp vs. Mistras Group | McGrath RentCorp vs. NL Industries |
| Triton International vs. Triton International Limited | Triton International vs. Triton International Limited | Triton International vs. Triton International Limited | Triton International vs. Costamare |
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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