Correlation Between Celestica and Garmin

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

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

Diversification Opportunities for Celestica and Garmin

0.76

Correlation Coefficient

Celestica  Garmin

Poor diversification

The 3 months correlation between Celestica and Garmin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and Celestica 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 Celestica 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 Celestica i.e., Celestica and Garmin go up and down completely randomly.

Pair Corralation between Celestica and Garmin

Considering the 90-day investment horizon Celestica is expected to generate 2.92 times more return on investment than Garmin. However, Celestica is 2.92 times more volatile than Garmin. It trades about 0.51 of its potential returns per unit of risk. Garmin is currently generating about 0.11 per unit of risk. If you would invest  9,825  in Celestica on October 26, 2024 and sell it today you would earn a total of  2,625  from holding Celestica or generate 26.72% return on investment over 90 days.

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

Celestica  vs.  Garmin

Celestica

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Garmin

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 12 (%) 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 Celestica and Garmin

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