Correlation Between Gentherm and Standard
Can any of the company-specific risk be diversified away by investing in both Gentherm and Standard 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 Standard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentherm and Standard Motor Products, you can compare the effects of market volatilities on Gentherm and Standard 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 Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentherm and Standard.
Diversification Opportunities for Gentherm and Standard
Poor diversification
The 3 months correlation between Gentherm and Standard is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gentherm and Standard Motor Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Motor 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 Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Motor Products has no effect on the direction of Gentherm i.e., Gentherm and Standard go up and down completely randomly.
Pair Corralation between Gentherm and Standard
Given the investment horizon of 90 days Gentherm is expected to generate 0.93 times more return on investment than Standard. However, Gentherm is 1.07 times less risky than Standard. It trades about 0.19 of its potential returns per unit of risk. Standard Motor Products is currently generating about 0.03 per unit of risk. If you would invest 3,863 in Gentherm on October 20, 2024 and sell it today you would earn a total of 151.00 from holding Gentherm or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gentherm vs. Standard Motor Products
Performance |
| Timeline |
| Gentherm |
| Standard Motor Products |
Gentherm and Standard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentherm and Standard
The main advantage of trading using opposite Gentherm and Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentherm position performs unexpectedly, Standard 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 Standard will offset losses from the drop in Standard's long position.| Gentherm vs. Monro Muffler Brake | Gentherm vs. Motorcar Parts of | Gentherm vs. Standard Motor Products | Gentherm vs. Stoneridge |
| Standard vs. Dorman Products | Standard vs. Motorcar Parts of | Standard vs. Douglas Dynamics | Standard 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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