Correlation Between Fox Factory and Gentex

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

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

Diversification Opportunities for Fox Factory and Gentex

0.9

Correlation Coefficient

Fox Factory  Gentex

Almost no diversification

The 3 months correlation between Fox and Gentex is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex and Fox Factory 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 Fox Factory Holding 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 Fox Factory i.e., Fox Factory and Gentex go up and down completely randomly.

Pair Corralation between Fox Factory and Gentex

Given the investment horizon of 90 days Fox Factory Holding is expected to generate 1.43 times more return on investment than Gentex. However, Fox Factory is 1.43 times more volatile than Gentex. It trades about -0.08 of its potential returns per unit of risk. Gentex is currently generating about -0.12 per unit of risk. If you would invest  2,987  in Fox Factory Holding on December 28, 2024 and sell it today you would lose (413.00) from holding Fox Factory Holding or give up 13.83% of portfolio value over 90 days.

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

Fox Factory Holding  vs.  Gentex

Fox Factory Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fox Factory Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gentex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fox Factory and Gentex

The main advantage of trading using opposite Fox Factory and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Factory 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 Fox Factory Holding 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.