Correlation Between Fortive Corp and Garmin

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

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

Diversification Opportunities for Fortive Corp and Garmin

0.59

Correlation Coefficient

Fortive Corp  Garmin

Very weak diversification

The 3 months correlation between Fortive and Garmin is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fortive Corp and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and Fortive Corp 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 Fortive Corp 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 Fortive Corp i.e., Fortive Corp and Garmin go up and down completely randomly.

Pair Corralation between Fortive Corp and Garmin

Considering the 90-day investment horizon Fortive Corp is expected to under-perform the Garmin. But the stock apears to be less risky and, when comparing its historical volatility, Fortive Corp is 2.06 times less risky than Garmin. The stock trades about -0.12 of its potential returns per unit of risk. The Garmin is currently generating about 0.21 of returns per unit of risk over similar time horizon. 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Fortive Corp  vs.  Garmin

Fortive Corp

Risk-Adjusted Performance

9 of 100

OK

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

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 Fortive Corp and Garmin

The main advantage of trading using opposite Fortive Corp and Garmin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortive Corp 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 Fortive Corp 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.