Correlation Between Shoals Technologies and Trinity Industries
Can any of the company-specific risk be diversified away by investing in both Shoals Technologies and Trinity Industries 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 Shoals Technologies and Trinity Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoals Technologies Group and Trinity Industries, you can compare the effects of market volatilities on Shoals Technologies and Trinity Industries 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 Shoals Technologies with a short position of Trinity Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoals Technologies and Trinity Industries.
Diversification Opportunities for Shoals Technologies and Trinity Industries
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shoals and Trinity is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Shoals Technologies Group and Trinity Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Industries and Shoals Technologies 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 Shoals Technologies Group are associated (or correlated) with Trinity Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Industries has no effect on the direction of Shoals Technologies i.e., Shoals Technologies and Trinity Industries go up and down completely randomly.
Pair Corralation between Shoals Technologies and Trinity Industries
Given the investment horizon of 90 days Shoals Technologies Group is expected to under-perform the Trinity Industries. In addition to that, Shoals Technologies is 1.89 times more volatile than Trinity Industries. It trades about -0.1 of its total potential returns per unit of risk. Trinity Industries is currently generating about 0.11 per unit of volatility. If you would invest 2,469 in Trinity Industries on August 27, 2024 and sell it today you would earn a total of 1,286 from holding Trinity Industries or generate 52.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoals Technologies Group vs. Trinity Industries
Performance |
| Timeline |
| Shoals Technologies |
| Trinity Industries |
Shoals Technologies and Trinity Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoals Technologies and Trinity Industries
The main advantage of trading using opposite Shoals Technologies and Trinity Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoals Technologies position performs unexpectedly, Trinity Industries 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 Trinity Industries will offset losses from the drop in Trinity Industries' long position.| Shoals Technologies vs. Array Technologies | Shoals Technologies vs. Sunnova Energy International | Shoals Technologies vs. Fluence Energy | Shoals Technologies vs. Playtika Holding Corp |
| Trinity Industries vs. LB Foster | Trinity Industries vs. Freightcar America | Trinity Industries vs. Westinghouse Air Brake | Trinity Industries vs. Norfolk Southern |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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