Correlation Between Cepton and Garmin

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

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

Diversification Opportunities for Cepton and Garmin

-0.45

Correlation Coefficient

Cepton  Garmin

Very good diversification

The 3 months correlation between Cepton and Garmin is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and Cepton 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 Cepton Inc 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 Cepton i.e., Cepton and Garmin go up and down completely randomly.

Pair Corralation between Cepton and Garmin

Assuming the 90 days horizon Cepton Inc is expected to generate 13.56 times more return on investment than Garmin. However, Cepton is 13.56 times more volatile than Garmin. It trades about 0.0 of its potential returns per unit of risk. Garmin is currently generating about -0.02 per unit of risk. If you would invest  1.12  in Cepton Inc on October 7, 2024 and sell it today you would lose (0.32) from holding Cepton Inc or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.56%
Values	Daily Returns

Cepton Inc  vs.  Garmin

Cepton Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cepton Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Cepton showed solid returns over the last few months and may actually be approaching a breakup point.

Garmin

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 10 (%) 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 Cepton and Garmin

The main advantage of trading using opposite Cepton and Garmin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cepton 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 Cepton Inc 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 Transaction History module to view history of all your transactions and understand their impact on performance.