Does Market Volatility Affect General Finance Corporation (NASDAQ: GFN) Share Price?

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If you are interested in General Finance Corporation (NASDAQ: GFN), you might want to consider its beta (measure of stock price volatility) in order to understand the impact the stock might have on your portfolio. Volatility is considered a measure of risk in modern financial theory. Investors may think that volatility falls into two main categories. The first type is company-specific volatility. Investors use uncorrelated equity diversification to reduce this type of price volatility across the entire portfolio. The second type is caused by the natural volatility of the markets as a whole. For example, certain macroeconomic events will affect (virtually) all securities in the market.

Some stocks see their prices evolve in concert with the market. Others tend toward stronger, softer or unrelated price movements. Beta is a widely used measure of a stock's exposure to market risk (volatility). Before proceeding, it should be noted that Warren Buffett pointed out in his 2014 letter to shareholders that "volatility is far from being risky". That said, beta can still be quite useful. The first thing to understand about beta is that market beta is one of them. A stock whose beta is less than one is less volatile than the market, is more volatile but not correlated to the market in general. In comparison, a stock with a beta greater than 1 tends to move in the same direction as the market in the long run, but with larger price changes.

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What does the beta value of GFN mean for investors?

Given that its beta is 1.47, we can assume that the General Finance stock price has been quite sensitive to market volatility (over the past 5 years). Based on this story, investors should be aware that General Finance is likely to rise sharply in times of greed, but to sell in times of fear. The beta is worth considering, but it is also important to determine if General Finance increases its revenues and revenues. You can take a look for yourself, below.

NASDAQGM: GFN Profit and Loss Account 7 February 19

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Could the size of GFN be more volatile?

With a market capitalization of 284 million US dollars, General Finance is a very small company at the global level. It is very likely that it is unknown to most investors. Its beta is relatively high, suggesting that it is fairly actively traded for a company of this size. Since it takes less capital to move the stock price of a small company like this, when a stock of this size is actively traded, it is often more sensitive to market volatility than larger ones. similar companies.

What does this mean for you?

Since General Finance has a relatively high beta, one has to wonder why it is so deeply influenced by the general sentiment of the market. For example, it can act as a high growth stock or a significant leverage in one's business model. In order to fully understand if GFN is a good investment for you, we also need to take into account important business fundamentals, such as the financial health and track record of General Finance. I urge you to continue your research by examining the following:

  1. Future prospects: What do well-informed industry analysts predict for GFN's future growth? Check out our free research report on analyst consensus on GFN's outlook.
  2. antecedents: Has GFN always performed independently of the highs and lows of the market? Learn more about past performance analysis and take a look at the free visual representations of GFN history for more clarity.
  3. Other interesting actionsIt is useful to check how GFN compares to other companies in terms of evaluation. You can start with this free list of potential options.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "To help readers understand the past volatility of the financial market in the short term, our goal is to provide you with a long-term research analysis based solely on fundamental data. Note that our analysis does not take into account the latest price sensitive business announcements.

The author is an independent contributor and, at the time of publication, was not positioned in the actions mentioned. For errors that need to be corrected, please contact the publisher at editorial-team@simplywallst.com.

"data-reactid =" 53 "> To help readers understand the short-term volatility of the financial market, we aim to provide you with a long-term research analysis based solely on fundamental data. account of the latest price sensitive business announcements.

The author is an independent contributor and, at the time of publication, was not positioned in the actions mentioned. For errors that need to be corrected, please contact the publisher at editorial-team@simplywallst.com.