Correlation Between Energous and Garmin

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

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

Diversification Opportunities for Energous and Garmin

-0.69

Correlation Coefficient

Energous  Garmin

Excellent diversification

The 3 months correlation between Energous and Garmin is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Energous and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and Energous 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 Energous 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 Energous i.e., Energous and Garmin go up and down completely randomly.

Pair Corralation between Energous and Garmin

Given the investment horizon of 90 days Energous is expected to under-perform the Garmin. In addition to that, Energous is 1.43 times more volatile than Garmin. It trades about -0.28 of its total potential returns per unit of risk. Garmin is currently generating about 0.13 per unit of volatility. If you would invest  17,202  in Garmin on September 15, 2024 and sell it today you would earn a total of  4,338  from holding Garmin or generate 25.22% return on investment over 90 days.

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

Energous  vs.  Garmin

Energous

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energous has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 Energous and Garmin

The main advantage of trading using opposite Energous and Garmin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energous 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 Energous 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.