Correlation Between Eltek and Garmin

Can any of the company-specific risk be diversified away by investing in both Eltek and Garmin 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 Eltek and Garmin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eltek and Garmin, you can compare the effects of market volatilities on Eltek and Garmin 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 Eltek with a short position of Garmin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and Garmin.

Diversification Opportunities for Eltek and Garmin

-0.92

Correlation Coefficient

Eltek  Garmin

Pay attention - limited upside

The 3 months correlation between Eltek and Garmin is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and Eltek 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 Eltek are associated (or correlated) with Garmin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garmin has no effect on the direction of Eltek i.e., Eltek and Garmin go up and down completely randomly.

Pair Corralation between Eltek and Garmin

Given the investment horizon of 90 days Eltek is expected to under-perform the Garmin. In addition to that, Eltek is 2.89 times more volatile than Garmin. It trades about -0.11 of its total potential returns per unit of risk. Garmin is currently generating about 0.21 per unit of volatility. If you would invest  12,215  in Garmin on January 20, 2024 and sell it today you would earn a total of  1,857  from holding Garmin or generate 15.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Eltek  vs.  Garmin

Eltek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eltek has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Garmin

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Garmin may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Eltek and Garmin

The main advantage of trading using opposite Eltek and Garmin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eltek position performs unexpectedly, Garmin 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 Garmin will offset losses from the drop in Garmin's long position.

The idea behind Eltek and Garmin pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.