Correlation Between GATX and ScanSource

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

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

Diversification Opportunities for GATX and ScanSource

0.65

Correlation Coefficient

GATX  ScanSource

Poor diversification

The 3 months correlation between GATX and ScanSource is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of GATX i.e., GATX and ScanSource go up and down completely randomly.

Pair Corralation between GATX and ScanSource

Given the investment horizon of 90 days GATX Corporation is expected to generate 1.0 times more return on investment than ScanSource. However, GATX is 1.0 times more volatile than ScanSource. It trades about 0.04 of its potential returns per unit of risk. ScanSource is currently generating about 0.03 per unit of risk. If you would invest  14,843  in GATX Corporation on May 14, 2025 and sell it today you would earn a total of  432.00  from holding GATX Corporation or generate 2.91% return on investment over 90 days.

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

GATX Corp.  vs.  ScanSource

GATX

Risk-Adjusted Performance

Weak

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

ScanSource

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ScanSource is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GATX and ScanSource

The main advantage of trading using opposite GATX and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GATX position performs unexpectedly, ScanSource 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 ScanSource will offset losses from the drop in ScanSource's long position.

The idea behind GATX Corporation and ScanSource 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.