Correlation Between Greif Bros and TriMas

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

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

Diversification Opportunities for Greif Bros and TriMas

0.64

Correlation Coefficient

Greif Bros  TriMas

Poor diversification

The 3 months correlation between Greif and TriMas is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Greif Bros and TriMas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TriMas and Greif Bros 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 Greif Bros are associated (or correlated) with TriMas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TriMas has no effect on the direction of Greif Bros i.e., Greif Bros and TriMas go up and down completely randomly.

Pair Corralation between Greif Bros and TriMas

Considering the 90-day investment horizon Greif Bros is expected to generate 0.82 times more return on investment than TriMas. However, Greif Bros is 1.22 times less risky than TriMas. It trades about 0.11 of its potential returns per unit of risk. TriMas is currently generating about 0.06 per unit of risk. If you would invest  6,101  in Greif Bros on August 19, 2024 and sell it today you would earn a total of  678.00  from holding Greif Bros or generate 11.11% return on investment over 90 days.

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

Greif Bros  vs.  TriMas

Greif Bros

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greif Bros are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Greif Bros may actually be approaching a critical reversion point that can send shares even higher in December 2024.

TriMas

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TriMas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, TriMas may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Greif Bros and TriMas

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

The idea behind Greif Bros and TriMas 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.