Correlation Between Triton International and McGrath RentCorp
Can any of the company-specific risk be diversified away by investing in both Triton International and McGrath RentCorp 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 Triton International and McGrath RentCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triton International Limited and McGrath RentCorp, you can compare the effects of market volatilities on Triton International and McGrath RentCorp 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 Triton International with a short position of McGrath RentCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triton International and McGrath RentCorp.
Diversification Opportunities for Triton International and McGrath RentCorp
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Triton and McGrath is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited and McGrath RentCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McGrath RentCorp and Triton International 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 Triton International Limited are associated (or correlated) with McGrath RentCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McGrath RentCorp has no effect on the direction of Triton International i.e., Triton International and McGrath RentCorp go up and down completely randomly.
Pair Corralation between Triton International and McGrath RentCorp
Assuming the 90 days trading horizon Triton International is expected to generate 1.61 times less return on investment than McGrath RentCorp. But when comparing it to its historical volatility, Triton International Limited is 1.86 times less risky than McGrath RentCorp. It trades about 0.04 of its potential returns per unit of risk. McGrath RentCorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,923 in McGrath RentCorp on November 19, 2024 and sell it today you would earn a total of 2,115 from holding McGrath RentCorp or generate 21.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Triton International Limited vs. McGrath RentCorp
Performance |
| Timeline |
| Triton International |
| McGrath RentCorp |
Triton International and McGrath RentCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triton International and McGrath RentCorp
The main advantage of trading using opposite Triton International and McGrath RentCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International position performs unexpectedly, McGrath RentCorp 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 McGrath RentCorp will offset losses from the drop in McGrath RentCorp's long position.| Triton International vs. Triton International Limited | Triton International vs. Triton International Limited | Triton International vs. Triton International Limited | Triton International vs. Costamare |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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