Correlation Between Trinity Industries and Ashtead Gro

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

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

Diversification Opportunities for Trinity Industries and Ashtead Gro

0.45

Correlation Coefficient

Trinity Industries  Ashtead Gro

Very weak diversification

The 3 months correlation between Trinity and Ashtead is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Trinity Industries and Ashtead Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Gro and Trinity Industries 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 Trinity Industries are associated (or correlated) with Ashtead Gro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Gro has no effect on the direction of Trinity Industries i.e., Trinity Industries and Ashtead Gro go up and down completely randomly.

Pair Corralation between Trinity Industries and Ashtead Gro

Considering the 90-day investment horizon Trinity Industries is expected to generate 97.63 times less return on investment than Ashtead Gro. In addition to that, Trinity Industries is 1.08 times more volatile than Ashtead Gro. It trades about 0.0 of its total potential returns per unit of risk. Ashtead Gro is currently generating about 0.2 per unit of volatility. If you would invest  21,712  in Ashtead Gro on May 4, 2025 and sell it today you would earn a total of  5,413  from holding Ashtead Gro or generate 24.93% return on investment over 90 days.

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

Trinity Industries  vs.  Ashtead Gro

Trinity Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trinity Industries has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Ashtead Gro

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ashtead Gro are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Ashtead Gro showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trinity Industries and Ashtead Gro

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

The idea behind Trinity Industries and Ashtead Gro 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.