Correlation Between GrafTech International and Garrett Motion
Can any of the company-specific risk be diversified away by investing in both GrafTech International and Garrett Motion 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 GrafTech International and Garrett Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GrafTech International and Garrett Motion, you can compare the effects of market volatilities on GrafTech International and Garrett Motion 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 GrafTech International with a short position of Garrett Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of GrafTech International and Garrett Motion.
Diversification Opportunities for GrafTech International and Garrett Motion
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GrafTech and Garrett is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding GrafTech International and Garrett Motion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garrett Motion and GrafTech International 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 GrafTech International are associated (or correlated) with Garrett Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garrett Motion has no effect on the direction of GrafTech International i.e., GrafTech International and Garrett Motion go up and down completely randomly.
Pair Corralation between GrafTech International and Garrett Motion
Considering the 90-day investment horizon GrafTech International is expected to under-perform the Garrett Motion. In addition to that, GrafTech International is 2.41 times more volatile than Garrett Motion. It trades about -0.14 of its total potential returns per unit of risk. Garrett Motion is currently generating about 0.19 per unit of volatility. If you would invest 897.00 in Garrett Motion on November 9, 2024 and sell it today you would earn a total of 58.00 from holding Garrett Motion or generate 6.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GrafTech International vs. Garrett Motion
Performance |
| Timeline |
| GrafTech International |
| Garrett Motion |
GrafTech International and Garrett Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GrafTech International and Garrett Motion
The main advantage of trading using opposite GrafTech International and Garrett Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GrafTech International position performs unexpectedly, Garrett Motion 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 Garrett Motion will offset losses from the drop in Garrett Motion's long position.| GrafTech International vs. Kimball Electronics | GrafTech International vs. Hayward Holdings | GrafTech International vs. Enersys | GrafTech International vs. Espey Mfg Electronics |
| Garrett Motion vs. Resideo Technologies | Garrett Motion vs. AdvanSix | Garrett Motion vs. GrafTech International | Garrett Motion vs. Innoviva |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Global Correlations Find global opportunities by holding instruments from different markets |