Correlation Between Flexsteel Industries and Garrett Motion
Can any of the company-specific risk be diversified away by investing in both Flexsteel Industries 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 Flexsteel Industries and Garrett Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexsteel Industries and Garrett Motion, you can compare the effects of market volatilities on Flexsteel Industries 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 Flexsteel Industries with a short position of Garrett Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexsteel Industries and Garrett Motion.
Diversification Opportunities for Flexsteel Industries and Garrett Motion
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flexsteel and Garrett is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Flexsteel Industries and Garrett Motion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garrett Motion and Flexsteel Industries 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 Flexsteel Industries 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 Flexsteel Industries i.e., Flexsteel Industries and Garrett Motion go up and down completely randomly.
Pair Corralation between Flexsteel Industries and Garrett Motion
Given the investment horizon of 90 days Flexsteel Industries is expected to generate 21.84 times less return on investment than Garrett Motion. In addition to that, Flexsteel Industries is 1.11 times more volatile than Garrett Motion. It trades about 0.01 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 772.00 in Garrett Motion on August 30, 2024 and sell it today you would earn a total of 65.00 from holding Garrett Motion or generate 8.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Flexsteel Industries vs. Garrett Motion
Performance |
| Timeline |
| Flexsteel Industries |
| Garrett Motion |
Flexsteel Industries and Garrett Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexsteel Industries and Garrett Motion
The main advantage of trading using opposite Flexsteel Industries and Garrett Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexsteel Industries 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.| Flexsteel Industries vs. Hooker Furniture | Flexsteel Industries vs. Bassett Furniture Industries | Flexsteel Industries vs. Willis Lease Finance | Flexsteel Industries vs. Rocky Brands |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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