Correlation Between Garrett Motion and Xpel
Can any of the company-specific risk be diversified away by investing in both Garrett Motion and Xpel 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 Garrett Motion and Xpel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garrett Motion and Xpel Inc, you can compare the effects of market volatilities on Garrett Motion and Xpel 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 Garrett Motion with a short position of Xpel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garrett Motion and Xpel.
Diversification Opportunities for Garrett Motion and Xpel
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Garrett and Xpel is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Garrett Motion and Xpel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xpel Inc and Garrett Motion 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 Garrett Motion are associated (or correlated) with Xpel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xpel Inc has no effect on the direction of Garrett Motion i.e., Garrett Motion and Xpel go up and down completely randomly.
Pair Corralation between Garrett Motion and Xpel
Considering the 90-day investment horizon Garrett Motion is expected to under-perform the Xpel. But the stock apears to be less risky and, when comparing its historical volatility, Garrett Motion is 1.26 times less risky than Xpel. The stock trades about -0.05 of its potential returns per unit of risk. The Xpel Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,213 in Xpel Inc on November 18, 2024 and sell it today you would lose (51.00) from holding Xpel Inc or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garrett Motion vs. Xpel Inc
Performance |
| Timeline |
| Garrett Motion |
| Xpel Inc |
Garrett Motion and Xpel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garrett Motion and Xpel
The main advantage of trading using opposite Garrett Motion and Xpel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garrett Motion position performs unexpectedly, Xpel 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 Xpel will offset losses from the drop in Xpel's long position.| Garrett Motion vs. Resideo Technologies | Garrett Motion vs. AdvanSix | Garrett Motion vs. GrafTech International | Garrett Motion vs. Innoviva |
| Xpel vs. Dorman Products | Xpel vs. Standard Motor Products | Xpel vs. Motorcar Parts of | Xpel vs. Stoneridge |
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 CEOs Directory module to screen CEOs from public companies around the world.
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