Correlation Between Gentex and Fox Factory
Can any of the company-specific risk be diversified away by investing in both Gentex and Fox Factory 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 Gentex and Fox Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentex and Fox Factory Holding, you can compare the effects of market volatilities on Gentex and Fox Factory 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 Gentex with a short position of Fox Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and Fox Factory.
Diversification Opportunities for Gentex and Fox Factory
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gentex and Fox is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Fox Factory Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Factory Holding and Gentex 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 Gentex are associated (or correlated) with Fox Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Factory Holding has no effect on the direction of Gentex i.e., Gentex and Fox Factory go up and down completely randomly.
Pair Corralation between Gentex and Fox Factory
Given the investment horizon of 90 days Gentex is expected to generate 0.38 times more return on investment than Fox Factory. However, Gentex is 2.62 times less risky than Fox Factory. It trades about 0.01 of its potential returns per unit of risk. Fox Factory Holding is currently generating about -0.06 per unit of risk. If you would invest 2,996 in Gentex on August 26, 2024 and sell it today you would earn a total of 44.00 from holding Gentex or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gentex vs. Fox Factory Holding
Performance |
| Timeline |
| Gentex |
| Fox Factory Holding |
Gentex and Fox Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentex and Fox Factory
The main advantage of trading using opposite Gentex and Fox Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex position performs unexpectedly, Fox Factory 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 Fox Factory will offset losses from the drop in Fox Factory's long position.The idea behind Gentex and Fox Factory Holding 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.| Fox Factory vs. Dorman Products | Fox Factory vs. Malibu Boats | Fox Factory vs. Installed Building Products | Fox Factory vs. ExlService Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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