Correlation Between CTS and Garmin

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

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

Diversification Opportunities for CTS and Garmin

0.79

Correlation Coefficient

CTS  Garmin

Poor diversification

The 3 months correlation between CTS and Garmin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and CTS 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 CTS Corporation 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 CTS i.e., CTS and Garmin go up and down completely randomly.

Pair Corralation between CTS and Garmin

Considering the 90-day investment horizon CTS Corporation is expected to under-perform the Garmin. In addition to that, CTS is 1.54 times more volatile than Garmin. It trades about -0.1 of its total potential returns per unit of risk. Garmin is currently generating about 0.21 per unit of volatility. If you would invest  20,930  in Garmin on October 23, 2024 and sell it today you would earn a total of  640.00  from holding Garmin or generate 3.06% return on investment over 90 days.

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

CTS Corp.  vs.  Garmin

CTS Corporation

Risk-Adjusted Performance

6 of 100

Modest

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

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 CTS and Garmin

The main advantage of trading using opposite CTS and Garmin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS 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 CTS Corporation 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.