Correlation Between Fortive and Cognex

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

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

Diversification Opportunities for Fortive and Cognex

0.14

Correlation Coefficient

Fortive  Cognex

Average diversification

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

Pair Corralation between Fortive and Cognex

Assuming the 90 days horizon Fortive is expected to generate 0.68 times more return on investment than Cognex. However, Fortive is 1.47 times less risky than Cognex. It trades about 0.03 of its potential returns per unit of risk. Cognex is currently generating about -0.03 per unit of risk. 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

Fortive  vs.  Cognex

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.

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.

Pair Trading with Fortive and Cognex

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

The idea behind Fortive and Cognex 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.