Correlation Between Charter Communications and Gentex

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

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

Diversification Opportunities for Charter Communications and Gentex

0.64

Correlation Coefficient

Charter Communications  Gentex

Poor diversification

The 3 months correlation between Charter and Gentex is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex and Charter Communications 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 Charter Communications are associated (or correlated) with Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Charter Communications i.e., Charter Communications and Gentex go up and down completely randomly.

Pair Corralation between Charter Communications and Gentex

Assuming the 90 days trading horizon Charter Communications is expected to under-perform the Gentex. In addition to that, Charter Communications is 2.21 times more volatile than Gentex. It trades about -0.22 of its total potential returns per unit of risk. Gentex is currently generating about -0.19 per unit of volatility. If you would invest  2,920  in Gentex on October 4, 2024 and sell it today you would lose (120.00) from holding Gentex or give up 4.11% of portfolio value over 90 days.

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

Charter Communications  vs.  Gentex

Charter Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gentex

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Gentex may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Charter Communications and Gentex

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

The idea behind Charter Communications and Gentex 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..