Correlation Between Cognex and Fortive

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

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

Diversification Opportunities for Cognex and Fortive

0.14

Correlation Coefficient

Cognex  Fortive

Average diversification

The 3 months correlation between Cognex and Fortive is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cognex and Fortive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive and Cognex 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 Cognex are associated (or correlated) with Fortive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive has no effect on the direction of Cognex i.e., Cognex and Fortive go up and down completely randomly.

Pair Corralation between Cognex and Fortive

Assuming the 90 days horizon Cognex is expected to under-perform the Fortive. In addition to that, Cognex is 1.47 times more volatile than Fortive. It trades about -0.03 of its total potential returns per unit of risk. Fortive is currently generating about 0.03 per unit of volatility. If you would invest  6,995  in Fortive on September 27, 2024 and sell it today you would earn a total of  141.00  from holding Fortive or generate 2.02% return on investment over 90 days.

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

Cognex  vs.  Fortive

Cognex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cognex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cognex is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fortive

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortive are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fortive is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cognex and Fortive

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

The idea behind Cognex and Fortive 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.