Correlation Between Gentherm and Fox Factory
Can any of the company-specific risk be diversified away by investing in both Gentherm and Fox Factory 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 Fox Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentherm and Fox Factory Holding, you can compare the effects of market volatilities on Gentherm and Fox Factory 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 Fox Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentherm and Fox Factory.
Diversification Opportunities for Gentherm and Fox Factory
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gentherm and Fox is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Gentherm and Fox Factory Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Factory Holding 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 Fox Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Factory Holding has no effect on the direction of Gentherm i.e., Gentherm and Fox Factory go up and down completely randomly.
Pair Corralation between Gentherm and Fox Factory
Given the investment horizon of 90 days Gentherm is expected to generate 0.65 times more return on investment than Fox Factory. However, Gentherm is 1.54 times less risky than Fox Factory. It trades about -0.09 of its potential returns per unit of risk. Fox Factory Holding is currently generating about -0.12 per unit of risk. If you would invest 4,327 in Gentherm on November 1, 2024 and sell it today you would lose (374.00) from holding Gentherm or give up 8.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gentherm vs. Fox Factory Holding
Performance |
| Timeline |
| Gentherm |
| Fox Factory Holding |
Gentherm and Fox Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentherm and Fox Factory
The main advantage of trading using opposite Gentherm and Fox Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentherm position performs unexpectedly, Fox Factory 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 Fox Factory will offset losses from the drop in Fox Factory's long position.| Gentherm vs. Monro Muffler Brake | Gentherm vs. Motorcar Parts of | Gentherm vs. Standard Motor Products | Gentherm vs. Stoneridge |
| Fox Factory vs. Dorman Products | Fox Factory vs. Malibu Boats | Fox Factory vs. Installed Building Products | Fox Factory vs. ExlService Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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