Correlation Between Gentex and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both Gentex and Johnson Controls 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 Gentex and Johnson Controls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentex and Johnson Controls International, you can compare the effects of market volatilities on Gentex and Johnson Controls 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 Gentex with a short position of Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and Johnson Controls.
Diversification Opportunities for Gentex and Johnson Controls
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gentex and Johnson is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int and Gentex 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 Gentex are associated (or correlated) with Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of Gentex i.e., Gentex and Johnson Controls go up and down completely randomly.
Pair Corralation between Gentex and Johnson Controls
Given the investment horizon of 90 days Gentex is expected to under-perform the Johnson Controls. But the stock apears to be less risky and, when comparing its historical volatility, Gentex is 1.01 times less risky than Johnson Controls. The stock trades about -0.36 of its potential returns per unit of risk. The Johnson Controls International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,316 in Johnson Controls International on January 18, 2024 and sell it today you would earn a total of 53.00 from holding Johnson Controls International or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gentex vs. Johnson Controls International
Performance |
| Timeline |
| Gentex |
| Johnson Controls Int |
Gentex and Johnson Controls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentex and Johnson Controls
The main advantage of trading using opposite Gentex and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex position performs unexpectedly, Johnson Controls 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 Johnson Controls will offset losses from the drop in Johnson Controls' long position.| Gentex vs. Hyliion Holdings Corp | Gentex vs. Foresight Autonomous Holdings | Gentex vs. Sypris Solutions | Gentex vs. Westport Fuel Systems |
| Johnson Controls vs. Carrier GlobalCorp | Johnson Controls vs. Lennox International | Johnson Controls vs. Masco | Johnson Controls vs. Carlisle Companies Incorporated |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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