Correlation Between Coherent and Garmin
Can any of the company-specific risk be diversified away by investing in both Coherent 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 Coherent and Garmin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coherent and Garmin, you can compare the effects of market volatilities on Coherent 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 Coherent with a short position of Garmin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coherent and Garmin.
Diversification Opportunities for Coherent and Garmin
Weak diversification
The 3 months correlation between Coherent and Garmin is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Coherent and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and Coherent 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 Coherent 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 Coherent i.e., Coherent and Garmin go up and down completely randomly.
Pair Corralation between Coherent and Garmin
Given the investment horizon of 90 days Coherent is expected to generate 4.2 times less return on investment than Garmin. But when comparing it to its historical volatility, Coherent is 1.23 times less risky than Garmin. It trades about 0.07 of its potential returns per unit of risk. Garmin is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 16,629 in Garmin on August 28, 2024 and sell it today you would earn a total of 4,656 from holding Garmin or generate 28.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coherent vs. Garmin
Performance |
| Timeline |
| Coherent |
| Garmin |
Coherent and Garmin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coherent and Garmin
The main advantage of trading using opposite Coherent and Garmin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coherent 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.| Coherent vs. MKS Instruments | Coherent vs. IPG Photonics | Coherent vs. Cognex | Coherent vs. Lumentum 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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