Correlation Between Garmin and Adecco Group

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

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

Diversification Opportunities for Garmin and Adecco Group

-0.69

Correlation Coefficient

Garmin  Adecco Group

Excellent diversification

The 3 months correlation between Garmin and Adecco is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Garmin and Adecco Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group AG and Garmin 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 Garmin are associated (or correlated) with Adecco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group AG has no effect on the direction of Garmin i.e., Garmin and Adecco Group go up and down completely randomly.

Pair Corralation between Garmin and Adecco Group

Given the investment horizon of 90 days Garmin is expected to generate 1.44 times more return on investment than Adecco Group. However, Garmin is 1.44 times more volatile than Adecco Group AG. It trades about 0.1 of its potential returns per unit of risk. Adecco Group AG is currently generating about -0.15 per unit of risk. If you would invest  17,936  in Garmin on September 3, 2024 and sell it today you would earn a total of  3,324  from holding Garmin or generate 18.53% return on investment over 90 days.

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

Garmin  vs.  Adecco Group AG

Garmin

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 7 (%) 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.

Adecco Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecco Group AG 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Garmin and Adecco Group

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

The idea behind Garmin and Adecco Group AG 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.