Correlation Between Gentex and Garrett Motion

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

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

Diversification Opportunities for Gentex and Garrett Motion

0.0

Correlation Coefficient

Gentex  Garrett Motion

Pay attention - limited upside

The 3 months correlation between Gentex and Garrett is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Garrett Motion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garrett Motion 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 Garrett Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garrett Motion has no effect on the direction of Gentex i.e., Gentex and Garrett Motion go up and down completely randomly.

Pair Corralation between Gentex and Garrett Motion

If you would invest (100.00) in Garrett Motion on January 20, 2024 and sell it today you would earn a total of  100.00  from holding Garrett Motion or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Gentex  vs.  Garrett Motion

Gentex

Risk-Adjusted Performance

3 of 100

Insignificant

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

Garrett Motion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garrett Motion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Garrett Motion is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Gentex and Garrett Motion

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

The idea behind Gentex and Garrett Motion 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.