Correlation Between Cepton and Trimble
Can any of the company-specific risk be diversified away by investing in both Cepton and Trimble 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 Cepton and Trimble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cepton Inc and Trimble, you can compare the effects of market volatilities on Cepton and Trimble 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 Cepton with a short position of Trimble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cepton and Trimble.
Diversification Opportunities for Cepton and Trimble
Good diversification
The 3 months correlation between Cepton and Trimble is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble and Cepton 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 Cepton Inc are associated (or correlated) with Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of Cepton i.e., Cepton and Trimble go up and down completely randomly.
Pair Corralation between Cepton and Trimble
Assuming the 90 days horizon Cepton Inc is expected to under-perform the Trimble. In addition to that, Cepton is 7.56 times more volatile than Trimble. It trades about -0.37 of its total potential returns per unit of risk. Trimble is currently generating about 0.3 per unit of volatility. If you would invest 6,971 in Trimble on November 2, 2024 and sell it today you would earn a total of 557.50 from holding Trimble or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 20.0% |
| Values | Daily Returns |
Cepton Inc vs. Trimble
Performance |
| Timeline |
| Cepton Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Trimble |
Cepton and Trimble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cepton and Trimble
The main advantage of trading using opposite Cepton and Trimble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cepton position performs unexpectedly, Trimble 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 Trimble will offset losses from the drop in Trimble's long position.The idea behind Cepton Inc and Trimble pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Trimble vs. Fortive Corp | Trimble vs. MKS Instruments | Trimble vs. Novanta | Trimble vs. Vishay Precision Group |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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