Correlation Between Water Ways and Textainer Group
Can any of the company-specific risk be diversified away by investing in both Water Ways and Textainer Group 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 Water Ways and Textainer Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Water Ways Technologies and Textainer Group Holdings, you can compare the effects of market volatilities on Water Ways and Textainer Group 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 Water Ways with a short position of Textainer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Water Ways and Textainer Group.
Diversification Opportunities for Water Ways and Textainer Group
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Water and Textainer is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Water Ways Technologies and Textainer Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textainer Group Holdings and Water Ways 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 Water Ways Technologies are associated (or correlated) with Textainer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textainer Group Holdings has no effect on the direction of Water Ways i.e., Water Ways and Textainer Group go up and down completely randomly.
Pair Corralation between Water Ways and Textainer Group
Assuming the 90 days horizon Water Ways Technologies is expected to generate 4.56 times more return on investment than Textainer Group. However, Water Ways is 4.56 times more volatile than Textainer Group Holdings. It trades about 0.01 of its potential returns per unit of risk. Textainer Group Holdings is currently generating about 0.04 per unit of risk. If you would invest 3.00 in Water Ways Technologies on August 28, 2024 and sell it today you would lose (2.15) from holding Water Ways Technologies or give up 71.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Water Ways Technologies vs. Textainer Group Holdings
Performance |
| Timeline |
| Water Ways Technologies |
| Textainer Group Holdings |
Water Ways and Textainer Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Water Ways and Textainer Group
The main advantage of trading using opposite Water Ways and Textainer Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Water Ways position performs unexpectedly, Textainer Group 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 Textainer Group will offset losses from the drop in Textainer Group's long position.| Water Ways vs. Alamo Group | Water Ways vs. Hyster Yale Materials Handling | Water Ways vs. Columbus McKinnon | Water Ways vs. AGCO Corporation |
| Textainer Group vs. Lion Electric Corp | Textainer Group vs. Nikola Corp | Textainer Group vs. Buhler Industries | Textainer Group vs. Toyota Industries |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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