Correlation Between Cooper Stnd and Gentherm
Can any of the company-specific risk be diversified away by investing in both Cooper Stnd and Gentherm 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 Cooper Stnd and Gentherm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cooper Stnd and Gentherm, you can compare the effects of market volatilities on Cooper Stnd and Gentherm 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 Cooper Stnd with a short position of Gentherm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Stnd and Gentherm.
Diversification Opportunities for Cooper Stnd and Gentherm
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cooper and Gentherm is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Stnd and Gentherm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentherm and Cooper Stnd 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 Cooper Stnd are associated (or correlated) with Gentherm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentherm has no effect on the direction of Cooper Stnd i.e., Cooper Stnd and Gentherm go up and down completely randomly.
Pair Corralation between Cooper Stnd and Gentherm
Considering the 90-day investment horizon Cooper Stnd is expected to generate 2.88 times more return on investment than Gentherm. However, Cooper Stnd is 2.88 times more volatile than Gentherm. It trades about 0.08 of its potential returns per unit of risk. Gentherm is currently generating about 0.04 per unit of risk. If you would invest 1,364 in Cooper Stnd on August 30, 2024 and sell it today you would earn a total of 92.00 from holding Cooper Stnd or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cooper Stnd vs. Gentherm
Performance |
| Timeline |
| Cooper Stnd |
| Gentherm |
Cooper Stnd and Gentherm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cooper Stnd and Gentherm
The main advantage of trading using opposite Cooper Stnd and Gentherm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Stnd position performs unexpectedly, Gentherm 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 Gentherm will offset losses from the drop in Gentherm's long position.| Cooper Stnd vs. Dorman Products | Cooper Stnd vs. Monro Muffler Brake | Cooper Stnd vs. Standard Motor Products | Cooper Stnd vs. Stoneridge |
| Gentherm vs. Monro Muffler Brake | Gentherm vs. Motorcar Parts of | Gentherm vs. Standard Motor Products | Gentherm vs. Stoneridge |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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