Correlation Between Fox Factory and Garrett Motion
Can any of the company-specific risk be diversified away by investing in both Fox Factory 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 Fox Factory and Garrett Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fox Factory Holding and Garrett Motion, you can compare the effects of market volatilities on Fox Factory 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 Fox Factory with a short position of Garrett Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fox Factory and Garrett Motion.
Diversification Opportunities for Fox Factory and Garrett Motion
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fox and Garrett is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and Garrett Motion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garrett Motion and Fox Factory 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 Fox Factory Holding 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 Fox Factory i.e., Fox Factory and Garrett Motion go up and down completely randomly.
Pair Corralation between Fox Factory and Garrett Motion
Given the investment horizon of 90 days Fox Factory Holding is expected to under-perform the Garrett Motion. In addition to that, Fox Factory is 1.47 times more volatile than Garrett Motion. It trades about -0.06 of its total potential returns per unit of risk. Garrett Motion is currently generating about -0.02 per unit of volatility. If you would invest 890.00 in Garrett Motion on August 24, 2024 and sell it today you would lose (70.00) from holding Garrett Motion or give up 7.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fox Factory Holding vs. Garrett Motion
Performance |
| Timeline |
| Fox Factory Holding |
| Garrett Motion |
Fox Factory and Garrett Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fox Factory and Garrett Motion
The main advantage of trading using opposite Fox Factory and Garrett Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Factory 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.| Fox Factory vs. Dorman Products | Fox Factory vs. Malibu Boats | Fox Factory vs. Installed Building Products | Fox Factory vs. ExlService Holdings |
| Garrett Motion vs. Gentex | Garrett Motion vs. Adient PLC | Garrett Motion vs. Autoliv | Garrett Motion vs. Fox Factory Holding |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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