Correlation Between Gentherm and Douglas Dynamics
Can any of the company-specific risk be diversified away by investing in both Gentherm and Douglas Dynamics 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 Douglas Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentherm and Douglas Dynamics, you can compare the effects of market volatilities on Gentherm and Douglas Dynamics 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 Douglas Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentherm and Douglas Dynamics.
Diversification Opportunities for Gentherm and Douglas Dynamics
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gentherm and Douglas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gentherm and Douglas Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Dynamics 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 Douglas Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Dynamics has no effect on the direction of Gentherm i.e., Gentherm and Douglas Dynamics go up and down completely randomly.
Pair Corralation between Gentherm and Douglas Dynamics
Given the investment horizon of 90 days Gentherm is expected to generate 0.47 times more return on investment than Douglas Dynamics. However, Gentherm is 2.11 times less risky than Douglas Dynamics. It trades about 0.16 of its potential returns per unit of risk. Douglas Dynamics is currently generating about -0.04 per unit of risk. If you would invest 4,030 in Gentherm on August 24, 2024 and sell it today you would earn a total of 233.00 from holding Gentherm or generate 5.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gentherm vs. Douglas Dynamics
Performance |
| Timeline |
| Gentherm |
| Douglas Dynamics |
Gentherm and Douglas Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentherm and Douglas Dynamics
The main advantage of trading using opposite Gentherm and Douglas Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentherm position performs unexpectedly, Douglas Dynamics 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 Douglas Dynamics will offset losses from the drop in Douglas Dynamics' long position.| Gentherm vs. Monro Muffler Brake | Gentherm vs. Motorcar Parts of | Gentherm vs. Standard Motor Products | Gentherm vs. Stoneridge |
| Douglas Dynamics vs. Monro Muffler Brake | Douglas Dynamics vs. Motorcar Parts of | Douglas Dynamics vs. Standard Motor Products | Douglas Dynamics 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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