Correlation Between Gibraltar Industries and Trane Technologies
Can any of the company-specific risk be diversified away by investing in both Gibraltar Industries and Trane Technologies 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 Gibraltar Industries and Trane Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gibraltar Industries and Trane Technologies plc, you can compare the effects of market volatilities on Gibraltar Industries and Trane Technologies 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 Gibraltar Industries with a short position of Trane Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gibraltar Industries and Trane Technologies.
Diversification Opportunities for Gibraltar Industries and Trane Technologies
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gibraltar and Trane is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gibraltar Industries and Trane Technologies plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trane Technologies plc and Gibraltar Industries 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 Gibraltar Industries are associated (or correlated) with Trane Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trane Technologies plc has no effect on the direction of Gibraltar Industries i.e., Gibraltar Industries and Trane Technologies go up and down completely randomly.
Pair Corralation between Gibraltar Industries and Trane Technologies
Given the investment horizon of 90 days Gibraltar Industries is expected to generate 1.21 times more return on investment than Trane Technologies. However, Gibraltar Industries is 1.21 times more volatile than Trane Technologies plc. It trades about 0.17 of its potential returns per unit of risk. Trane Technologies plc is currently generating about 0.14 per unit of risk. If you would invest 6,509 in Gibraltar Industries on August 24, 2024 and sell it today you would earn a total of 463.00 from holding Gibraltar Industries or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gibraltar Industries vs. Trane Technologies plc
Performance |
| Timeline |
| Gibraltar Industries |
| Trane Technologies plc |
Gibraltar Industries and Trane Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gibraltar Industries and Trane Technologies
The main advantage of trading using opposite Gibraltar Industries and Trane Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gibraltar Industries position performs unexpectedly, Trane Technologies 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 Trane Technologies will offset losses from the drop in Trane Technologies' long position.| Gibraltar Industries vs. Quanex Building Products | Gibraltar Industries vs. Jeld Wen Holding | Gibraltar Industries vs. Perma Pipe International Holdings | Gibraltar Industries vs. Interface |
| Trane Technologies vs. Fortune Brands Innovations | Trane Technologies vs. Johnson Controls International | Trane Technologies vs. Lennox International | Trane Technologies vs. Builders FirstSource |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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