Correlation Between Gentex and ReposiTrak

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

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

Diversification Opportunities for Gentex and ReposiTrak

0.14

Correlation Coefficient

Gentex  ReposiTrak

Average diversification

The 3 months correlation between Gentex and ReposiTrak is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and ReposiTrak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReposiTrak and Gentex 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 Gentex are associated (or correlated) with ReposiTrak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReposiTrak has no effect on the direction of Gentex i.e., Gentex and ReposiTrak go up and down completely randomly.

Pair Corralation between Gentex and ReposiTrak

Given the investment horizon of 90 days Gentex is expected to under-perform the ReposiTrak. But the stock apears to be less risky and, when comparing its historical volatility, Gentex is 3.12 times less risky than ReposiTrak. The stock trades about -0.53 of its potential returns per unit of risk. The ReposiTrak is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,274  in ReposiTrak on October 9, 2024 and sell it today you would lose (100.00) from holding ReposiTrak or give up 4.4% of portfolio value over 90 days.

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

Gentex  vs.  ReposiTrak

Gentex

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Gentex is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

ReposiTrak

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ReposiTrak are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, ReposiTrak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gentex and ReposiTrak

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

The idea behind Gentex and ReposiTrak 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.