Correlation Between SES AI and Garrett Motion
Can any of the company-specific risk be diversified away by investing in both SES AI and Garrett Motion 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 SES AI and Garrett Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SES AI Corp and Garrett Motion, you can compare the effects of market volatilities on SES AI and Garrett Motion 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 SES AI with a short position of Garrett Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of SES AI and Garrett Motion.
Diversification Opportunities for SES AI and Garrett Motion
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SES and Garrett is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SES AI Corp and Garrett Motion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garrett Motion and SES AI 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 SES AI Corp are associated (or correlated) with Garrett Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garrett Motion has no effect on the direction of SES AI i.e., SES AI and Garrett Motion go up and down completely randomly.
Pair Corralation between SES AI and Garrett Motion
Considering the 90-day investment horizon SES AI Corp is expected to under-perform the Garrett Motion. In addition to that, SES AI is 2.63 times more volatile than Garrett Motion. It trades about -0.11 of its total potential returns per unit of risk. Garrett Motion is currently generating about 0.03 per unit of volatility. If you would invest 758.00 in Garrett Motion on August 27, 2024 and sell it today you would earn a total of 73.00 from holding Garrett Motion or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SES AI Corp vs. Garrett Motion
Performance |
| Timeline |
| SES AI Corp |
| Garrett Motion |
SES AI and Garrett Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SES AI and Garrett Motion
The main advantage of trading using opposite SES AI and Garrett Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SES AI position performs unexpectedly, Garrett Motion 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 Garrett Motion will offset losses from the drop in Garrett Motion's long position.| SES AI vs. Cooper Stnd | SES AI vs. Motorcar Parts of | SES AI vs. American Axle Manufacturing | SES AI 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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