Correlation Between Gentex and 26875PAM3

Can any of the company-specific risk be diversified away by investing in both Gentex and 26875PAM3 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 26875PAM3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gentex and EOG RES INC, you can compare the effects of market volatilities on Gentex and 26875PAM3 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 26875PAM3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and 26875PAM3.

Diversification Opportunities for Gentex and 26875PAM3

-0.13

Correlation Coefficient

Gentex  26875PAM3

Good diversification

The 3 months correlation between Gentex and 26875PAM3 is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and EOG RES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG RES INC 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 26875PAM3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG RES INC has no effect on the direction of Gentex i.e., Gentex and 26875PAM3 go up and down completely randomly.

Pair Corralation between Gentex and 26875PAM3

Given the investment horizon of 90 days Gentex is expected to under-perform the 26875PAM3. In addition to that, Gentex is 1.95 times more volatile than EOG RES INC. It trades about -0.23 of its total potential returns per unit of risk. EOG RES INC is currently generating about -0.21 per unit of volatility. If you would invest  9,964  in EOG RES INC on October 27, 2024 and sell it today you would lose (252.00) from holding EOG RES INC or give up 2.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Gentex  vs.  EOG RES INC

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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

EOG RES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOG RES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26875PAM3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gentex and 26875PAM3

The main advantage of trading using opposite Gentex and 26875PAM3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex position performs unexpectedly, 26875PAM3 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 26875PAM3 will offset losses from the drop in 26875PAM3's long position.

The idea behind Gentex and EOG RES INC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.