Correlation Between Gentherm and Dorman Products
Can any of the company-specific risk be diversified away by investing in both Gentherm and Dorman Products 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 Gentherm and Dorman Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentherm and Dorman Products, you can compare the effects of market volatilities on Gentherm and Dorman Products 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 Gentherm with a short position of Dorman Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentherm and Dorman Products.
Diversification Opportunities for Gentherm and Dorman Products
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gentherm and Dorman is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gentherm and Dorman Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorman Products and Gentherm 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 Gentherm are associated (or correlated) with Dorman Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorman Products has no effect on the direction of Gentherm i.e., Gentherm and Dorman Products go up and down completely randomly.
Pair Corralation between Gentherm and Dorman Products
Given the investment horizon of 90 days Gentherm is expected to under-perform the Dorman Products. But the stock apears to be less risky and, when comparing its historical volatility, Gentherm is 1.04 times less risky than Dorman Products. The stock trades about -0.09 of its potential returns per unit of risk. The Dorman Products is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12,779 in Dorman Products on November 1, 2024 and sell it today you would earn a total of 527.00 from holding Dorman Products or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gentherm vs. Dorman Products
Performance |
| Timeline |
| Gentherm |
| Dorman Products |
Gentherm and Dorman Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentherm and Dorman Products
The main advantage of trading using opposite Gentherm and Dorman Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentherm position performs unexpectedly, Dorman Products 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 Dorman Products will offset losses from the drop in Dorman Products' long position.| Gentherm vs. Monro Muffler Brake | Gentherm vs. Motorcar Parts of | Gentherm vs. Standard Motor Products | Gentherm vs. Stoneridge |
| Dorman Products vs. Standard Motor Products | Dorman Products vs. Motorcar Parts of | Dorman Products vs. Douglas Dynamics | Dorman Products 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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