Correlation Between Garmin and Energous

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

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

Diversification Opportunities for Garmin and Energous

-0.69

Correlation Coefficient

Garmin  Energous

Excellent diversification

The 3 months correlation between Garmin and Energous is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Garmin and Energous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energous and Garmin 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 Garmin are associated (or correlated) with Energous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energous has no effect on the direction of Garmin i.e., Garmin and Energous go up and down completely randomly.

Pair Corralation between Garmin and Energous

Given the investment horizon of 90 days Garmin is expected to generate 0.8 times more return on investment than Energous. However, Garmin is 1.25 times less risky than Energous. It trades about 0.11 of its potential returns per unit of risk. Energous is currently generating about -0.25 per unit of risk. If you would invest  17,041  in Garmin on September 20, 2024 and sell it today you would earn a total of  3,501  from holding Garmin or generate 20.54% return on investment over 90 days.

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

Garmin  vs.  Energous

Garmin

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 8 (%) 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.

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 abnormal 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.

Pair Trading with Garmin and Energous

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

The idea behind Garmin and Energous 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.