Correlation Between Global Warming and Garmin

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

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

Diversification Opportunities for Global Warming and Garmin

0.85

Correlation Coefficient

Global Warming  Garmin

Very poor diversification

The 3 months correlation between Global and Garmin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Global Warming Solut and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and Global Warming 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 Global Warming Solut are associated (or correlated) with Garmin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garmin has no effect on the direction of Global Warming i.e., Global Warming and Garmin go up and down completely randomly.

Pair Corralation between Global Warming and Garmin

Given the investment horizon of 90 days Global Warming Solut is expected to under-perform the Garmin. In addition to that, Global Warming is 13.19 times more volatile than Garmin. It trades about -0.01 of its total potential returns per unit of risk. Garmin is currently generating about 0.15 per unit of volatility. If you would invest  20,854  in Garmin on September 17, 2024 and sell it today you would earn a total of  614.00  from holding Garmin or generate 2.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Global Warming Solut  vs.  Garmin

Global Warming Solut

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Warming Solut are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global Warming displayed solid returns over the last few months and may actually be approaching a breakup point.

Garmin

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 9 (%) 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.

Pair Trading with Global Warming and Garmin

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

The idea behind Global Warming Solut and Garmin 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.