Correlation Between Allient and Garmin

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

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

Diversification Opportunities for Allient and Garmin

0.84

Correlation Coefficient

Allient  Garmin

Very poor diversification

The 3 months correlation between Allient and Garmin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and Allient 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 Allient 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 Allient i.e., Allient and Garmin go up and down completely randomly.

Pair Corralation between Allient and Garmin

Given the investment horizon of 90 days Allient is expected to generate 3.31 times more return on investment than Garmin. However, Allient is 3.31 times more volatile than Garmin. It trades about 0.25 of its potential returns per unit of risk. Garmin is currently generating about 0.26 per unit of risk. If you would invest  2,361  in Allient on October 23, 2024 and sell it today you would earn a total of  302.00  from holding Allient or generate 12.79% return on investment over 90 days.

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

Allient  vs.  Garmin

Allient

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Garmin

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Allient and Garmin

The main advantage of trading using opposite Allient and Garmin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient 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 Allient 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.