Correlation Between Allison Transmission and Gentex
Can any of the company-specific risk be diversified away by investing in both Allison Transmission and Gentex 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 Allison Transmission and Gentex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allison Transmission Holdings and Gentex, you can compare the effects of market volatilities on Allison Transmission and Gentex 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 Allison Transmission with a short position of Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allison Transmission and Gentex.
Diversification Opportunities for Allison Transmission and Gentex
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Allison and Gentex is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Allison Transmission Holdings and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex and Allison Transmission 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 Allison Transmission Holdings are associated (or correlated) with Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Allison Transmission i.e., Allison Transmission and Gentex go up and down completely randomly.
Pair Corralation between Allison Transmission and Gentex
Given the investment horizon of 90 days Allison Transmission Holdings is expected to generate 2.04 times more return on investment than Gentex. However, Allison Transmission is 2.04 times more volatile than Gentex. It trades about 0.37 of its potential returns per unit of risk. Gentex is currently generating about -0.11 per unit of risk. If you would invest 9,964 in Allison Transmission Holdings on August 27, 2024 and sell it today you would earn a total of 2,001 from holding Allison Transmission Holdings or generate 20.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allison Transmission Holdings vs. Gentex
Performance |
| Timeline |
| Allison Transmission |
| Gentex |
Allison Transmission and Gentex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allison Transmission and Gentex
The main advantage of trading using opposite Allison Transmission and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allison Transmission position performs unexpectedly, Gentex 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 Gentex will offset losses from the drop in Gentex's long position.| Allison Transmission vs. Gentex | Allison Transmission vs. Adient PLC | Allison Transmission vs. Autoliv | Allison Transmission vs. Fox Factory Holding |
Check out your portfolio center.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.
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