Correlation Between Cognex and Fortive Corp

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

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

Diversification Opportunities for Cognex and Fortive Corp

-0.15

Correlation Coefficient

Cognex  Fortive Corp

Good diversification

The 3 months correlation between Cognex and Fortive is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cognex and Fortive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive Corp and Cognex 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 Cognex are associated (or correlated) with Fortive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive Corp has no effect on the direction of Cognex i.e., Cognex and Fortive Corp go up and down completely randomly.

Pair Corralation between Cognex and Fortive Corp

Given the investment horizon of 90 days Cognex is expected to under-perform the Fortive Corp. In addition to that, Cognex is 1.93 times more volatile than Fortive Corp. It trades about -0.17 of its total potential returns per unit of risk. Fortive Corp is currently generating about 0.15 per unit of volatility. If you would invest  7,474  in Fortive Corp on September 16, 2024 and sell it today you would earn a total of  212.00  from holding Fortive Corp or generate 2.84% return on investment over 90 days.

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

Cognex  vs.  Fortive Corp

Cognex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cognex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cognex is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Fortive Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortive Corp are ranked lower than 4 (%) 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.

Pair Trading with Cognex and Fortive Corp

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

The idea behind Cognex and Fortive Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.