Correlation Between Garmin and Electro Sensors
Can any of the company-specific risk be diversified away by investing in both Garmin and Electro Sensors 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 Garmin and Electro Sensors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garmin and Electro Sensors, you can compare the effects of market volatilities on Garmin and Electro Sensors 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 Garmin with a short position of Electro Sensors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garmin and Electro Sensors.
Diversification Opportunities for Garmin and Electro Sensors
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Garmin and Electro is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Garmin and Electro Sensors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Sensors and Garmin 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 Garmin are associated (or correlated) with Electro Sensors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Sensors has no effect on the direction of Garmin i.e., Garmin and Electro Sensors go up and down completely randomly.
Pair Corralation between Garmin and Electro Sensors
Given the investment horizon of 90 days Garmin is expected to generate 1.41 times more return on investment than Electro Sensors. However, Garmin is 1.41 times more volatile than Electro Sensors. It trades about 0.1 of its potential returns per unit of risk. Electro Sensors is currently generating about 0.04 per unit of risk. If you would invest 16,177 in Garmin on August 31, 2024 and sell it today you would earn a total of 5,083 from holding Garmin or generate 31.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.98% |
| Values | Daily Returns |
Garmin vs. Electro Sensors
Performance |
| Timeline |
| Garmin |
| Electro Sensors |
Garmin and Electro Sensors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garmin and Electro Sensors
The main advantage of trading using opposite Garmin and Electro Sensors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garmin position performs unexpectedly, Electro Sensors 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 Electro Sensors will offset losses from the drop in Electro Sensors' long position.| Garmin vs. Vontier Corp | Garmin vs. Teledyne Technologies Incorporated | Garmin vs. ESCO Technologies | Garmin vs. MKS Instruments |
| Electro Sensors vs. Sono Tek Corp | Electro Sensors vs. Vishay Precision Group | Electro Sensors vs. Keyence | Electro Sensors vs. Luna Innovations Incorporated |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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