Correlation Between GATX and Triton International

Can any of the company-specific risk be diversified away by investing in both GATX 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 GATX and Triton International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GATX Corporation and Triton International Limited, you can compare the effects of market volatilities on GATX 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 GATX with a short position of Triton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GATX and Triton International.

Diversification Opportunities for GATX and Triton International

0.52

Correlation Coefficient

GATX  Triton International

Very weak diversification

The 3 months correlation between GATX and Triton is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International and GATX 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 GATX Corporation 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 GATX i.e., GATX and Triton International go up and down completely randomly.

Pair Corralation between GATX and Triton International

Given the investment horizon of 90 days GATX Corporation is expected to generate 2.64 times more return on investment than Triton International. However, GATX is 2.64 times more volatile than Triton International Limited. It trades about 0.13 of its potential returns per unit of risk. Triton International Limited is currently generating about 0.07 per unit of risk. If you would invest  12,607  in GATX Corporation on February 23, 2024 and sell it today you would earn a total of  1,210  from holding GATX Corporation or generate 9.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

GATX Corp.  vs.  Triton International Limited

GATX

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GATX Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, GATX may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Triton International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Triton International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GATX and Triton International

The main advantage of trading using opposite GATX and Triton International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GATX 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.

The idea behind GATX Corporation and Triton International Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.