Correlation Between Garofalo Health and TomTom NV

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

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

Diversification Opportunities for Garofalo Health and TomTom NV

0.0

Correlation Coefficient

Garofalo Health  TomTom NV

Pay attention - limited upside

The 3 months correlation between Garofalo and TomTom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Garofalo Health Care and TomTom NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TomTom NV and Garofalo Health 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 Garofalo Health Care are associated (or correlated) with TomTom NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TomTom NV has no effect on the direction of Garofalo Health i.e., Garofalo Health and TomTom NV go up and down completely randomly.

Pair Corralation between Garofalo Health and TomTom NV

If you would invest (100.00) in TomTom NV on October 9, 2024 and sell it today you would earn a total of  100.00  from holding TomTom NV or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Garofalo Health Care  vs.  TomTom NV

Garofalo Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garofalo Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Garofalo Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TomTom NV

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days TomTom NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TomTom NV is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Garofalo Health and TomTom NV

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

The idea behind Garofalo Health Care and TomTom NV 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.