Correlation Between Gentex and ReposiTrak
Can any of the company-specific risk be diversified away by investing in both Gentex and ReposiTrak 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 ReposiTrak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentex and ReposiTrak, you can compare the effects of market volatilities on Gentex and ReposiTrak 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 ReposiTrak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and ReposiTrak.
Diversification Opportunities for Gentex and ReposiTrak
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gentex and ReposiTrak is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and ReposiTrak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReposiTrak 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 ReposiTrak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReposiTrak has no effect on the direction of Gentex i.e., Gentex and ReposiTrak go up and down completely randomly.
Pair Corralation between Gentex and ReposiTrak
Given the investment horizon of 90 days Gentex is expected to generate 0.56 times more return on investment than ReposiTrak. However, Gentex is 1.78 times less risky than ReposiTrak. It trades about -0.18 of its potential returns per unit of risk. ReposiTrak is currently generating about -0.1 per unit of risk. If you would invest 2,910 in Gentex on October 25, 2024 and sell it today you would lose (109.00) from holding Gentex or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gentex vs. ReposiTrak
Performance |
| Timeline |
| Gentex |
| ReposiTrak |
Gentex and ReposiTrak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentex and ReposiTrak
The main advantage of trading using opposite Gentex and ReposiTrak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex position performs unexpectedly, ReposiTrak 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 ReposiTrak will offset losses from the drop in ReposiTrak's long position.The idea behind Gentex and ReposiTrak 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.| ReposiTrak vs. Freedom Internet Group | ReposiTrak vs. GMO Internet | ReposiTrak vs. Radcom | ReposiTrak vs. Zhihu Inc ADR |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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