Correlation Between Vontier Corp and Garmin

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

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

Diversification Opportunities for Vontier Corp and Garmin

0.27

Correlation Coefficient

Vontier Corp  Garmin

Modest diversification

The 3 months correlation between Vontier and Garmin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vontier Corp and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and Vontier Corp 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 Vontier Corp 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 Vontier Corp i.e., Vontier Corp and Garmin go up and down completely randomly.

Pair Corralation between Vontier Corp and Garmin

Considering the 90-day investment horizon Vontier Corp is expected to under-perform the Garmin. But the stock apears to be less risky and, when comparing its historical volatility, Vontier Corp is 1.24 times less risky than Garmin. The stock trades about -0.08 of its potential returns per unit of risk. The Garmin is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  20,672  in Garmin on December 28, 2024 and sell it today you would earn a total of  694.00  from holding Garmin or generate 3.36% return on investment over 90 days.

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

Vontier Corp  vs.  Garmin

Vontier Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vontier Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Garmin

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Garmin is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vontier Corp and Garmin

The main advantage of trading using opposite Vontier Corp and Garmin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vontier Corp 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 Vontier Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.