Correlation Between Fortive Corp and Cognex
Can any of the company-specific risk be diversified away by investing in both Fortive Corp and Cognex 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 Fortive Corp and Cognex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortive Corp and Cognex, you can compare the effects of market volatilities on Fortive Corp and Cognex 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 Fortive Corp with a short position of Cognex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortive Corp and Cognex.
Diversification Opportunities for Fortive Corp and Cognex
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fortive and Cognex is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fortive Corp and Cognex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognex and Fortive Corp 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 Fortive Corp are associated (or correlated) with Cognex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognex has no effect on the direction of Fortive Corp i.e., Fortive Corp and Cognex go up and down completely randomly.
Pair Corralation between Fortive Corp and Cognex
Considering the 90-day investment horizon Fortive Corp is expected to generate 43.0 times less return on investment than Cognex. But when comparing it to its historical volatility, Fortive Corp is 1.58 times less risky than Cognex. It trades about 0.0 of its potential returns per unit of risk. Cognex is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,019 in Cognex on August 28, 2024 and sell it today you would earn a total of 5.00 from holding Cognex or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortive Corp vs. Cognex
Performance |
| Timeline |
| Fortive Corp |
| Cognex |
Fortive Corp and Cognex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortive Corp and Cognex
The main advantage of trading using opposite Fortive Corp and Cognex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortive Corp position performs unexpectedly, Cognex 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 Cognex will offset losses from the drop in Cognex's long position.| Fortive Corp vs. Novanta | Fortive Corp vs. Sono Tek Corp | Fortive Corp vs. Itron Inc | Fortive Corp vs. Badger Meter |
| Cognex vs. Vontier Corp | Cognex vs. Teledyne Technologies Incorporated | Cognex vs. ESCO Technologies | Cognex vs. MKS Instruments |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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