Correlation Between Fortive Corp and Trimble

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

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

Diversification Opportunities for Fortive Corp and Trimble

0.82

Correlation Coefficient

Fortive Corp  Trimble

Very poor diversification

The 3 months correlation between Fortive and Trimble is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fortive Corp and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble 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 Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of Fortive Corp i.e., Fortive Corp and Trimble go up and down completely randomly.

Pair Corralation between Fortive Corp and Trimble

Considering the 90-day investment horizon Fortive Corp is expected to generate 0.71 times more return on investment than Trimble. However, Fortive Corp is 1.42 times less risky than Trimble. It trades about 0.04 of its potential returns per unit of risk. Trimble is currently generating about 0.0 per unit of risk. If you would invest  6,026  in Fortive Corp on January 26, 2024 and sell it today you would earn a total of  1,579  from holding Fortive Corp or generate 26.2% return on investment over 90 days.

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

Fortive Corp  vs.  Trimble

Fortive Corp

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortive Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Fortive Corp is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Trimble

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trimble are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady primary indicators, Trimble sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortive Corp and Trimble

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

The idea behind Fortive Corp and Trimble 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.