Correlation Between Garmin and Trimble
Can any of the company-specific risk be diversified away by investing in both Garmin and Trimble 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 Trimble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garmin and Trimble, you can compare the effects of market volatilities on Garmin and Trimble 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 Trimble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garmin and Trimble.
Diversification Opportunities for Garmin and Trimble
Poor diversification
The 3 months correlation between Garmin and Trimble is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Garmin and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble 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 Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of Garmin i.e., Garmin and Trimble go up and down completely randomly.
Pair Corralation between Garmin and Trimble
Given the investment horizon of 90 days Garmin is expected to generate 1.29 times more return on investment than Trimble. However, Garmin is 1.29 times more volatile than Trimble. It trades about 0.24 of its potential returns per unit of risk. Trimble is currently generating about 0.21 per unit of risk. If you would invest 16,629 in Garmin on August 28, 2024 and sell it today you would earn a total of 4,656 from holding Garmin or generate 28.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garmin vs. Trimble
Performance |
| Timeline |
| Garmin |
| Trimble |
Garmin and Trimble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garmin and Trimble
The main advantage of trading using opposite Garmin and Trimble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garmin position performs unexpectedly, Trimble 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 Trimble will offset losses from the drop in Trimble's long position.| Garmin vs. Vontier Corp | Garmin vs. Teledyne Technologies Incorporated | Garmin vs. ESCO Technologies | Garmin 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 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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