Correlation Between FirstGroup PLC and Trinity Industries

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

By analyzing existing cross correlation between FirstGroup PLC ADR and Trinity Industries, you can compare the effects of market volatilities on FirstGroup PLC 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 FirstGroup PLC with a short position of Trinity Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstGroup PLC and Trinity Industries.

Diversification Opportunities for FirstGroup PLC and Trinity Industries

-0.55

Correlation Coefficient

FirstGroup PLC  Trinity Industries

Excellent diversification

The 3 months correlation between FirstGroup and Trinity is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding FirstGroup PLC ADR and Trinity Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Industries and FirstGroup PLC 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 FirstGroup PLC ADR 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 FirstGroup PLC i.e., FirstGroup PLC and Trinity Industries go up and down completely randomly.

Pair Corralation between FirstGroup PLC and Trinity Industries

Assuming the 90 days horizon FirstGroup PLC is expected to generate 1.21 times less return on investment than Trinity Industries. In addition to that, FirstGroup PLC is 1.49 times more volatile than Trinity Industries. It trades about 0.03 of its total potential returns per unit of risk. Trinity Industries is currently generating about 0.05 per unit of volatility. If you would invest  2,672  in Trinity Industries on June 30, 2025 and sell it today you would earn a total of  132.00  from holding Trinity Industries or generate 4.94% return on investment over 90 days.

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

FirstGroup PLC ADR  vs.  Trinity Industries

FirstGroup PLC ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FirstGroup PLC ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, FirstGroup PLC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Trinity Industries

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Trinity Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Trinity Industries is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FirstGroup PLC and Trinity Industries

The main advantage of trading using opposite FirstGroup PLC and Trinity Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstGroup PLC 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.

The idea behind FirstGroup PLC ADR and Trinity Industries 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.