Correlation Between Air Transport and Garmin
Can any of the company-specific risk be diversified away by investing in both Air Transport and Garmin 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 Air Transport and Garmin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and Garmin, you can compare the effects of market volatilities on Air Transport and Garmin 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 Air Transport with a short position of Garmin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Garmin.
Diversification Opportunities for Air Transport and Garmin
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Air and Garmin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and Air Transport 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 Air Transport Services are associated (or correlated) with Garmin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garmin has no effect on the direction of Air Transport i.e., Air Transport and Garmin go up and down completely randomly.
Pair Corralation between Air Transport and Garmin
Given the investment horizon of 90 days Air Transport is expected to generate 4.24 times less return on investment than Garmin. But when comparing it to its historical volatility, Air Transport Services is 8.69 times less risky than Garmin. It trades about 0.53 of its potential returns per unit of risk. Garmin is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 20,930 in Garmin on October 23, 2024 and sell it today you would earn a total of 852.00 from holding Garmin or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Garmin
Performance |
| Timeline |
| Air Transport Services |
| Garmin |
Air Transport and Garmin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Garmin
The main advantage of trading using opposite Air Transport and Garmin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, Garmin 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 Garmin will offset losses from the drop in Garmin's long position.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
| Garmin vs. Vontier Corp | Garmin vs. Teledyne Technologies Incorporated | Garmin vs. ESCO Technologies | Garmin vs. MKS Instruments |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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