Correlation Between Garrett Motion and AdvanSix

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

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

Diversification Opportunities for Garrett Motion and AdvanSix

0.17

Correlation Coefficient

Garrett Motion  AdvanSix

Average diversification

The 3 months correlation between Garrett and AdvanSix is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Garrett Motion and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix and Garrett Motion 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 Garrett Motion are associated (or correlated) with AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of Garrett Motion i.e., Garrett Motion and AdvanSix go up and down completely randomly.

Pair Corralation between Garrett Motion and AdvanSix

Considering the 90-day investment horizon Garrett Motion is expected to generate 1.13 times more return on investment than AdvanSix. However, Garrett Motion is 1.13 times more volatile than AdvanSix. It trades about 0.08 of its potential returns per unit of risk. AdvanSix is currently generating about -0.05 per unit of risk. If you would invest  818.00  in Garrett Motion on September 30, 2024 and sell it today you would earn a total of  78.00  from holding Garrett Motion or generate 9.54% return on investment over 90 days.

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

Garrett Motion  vs.  AdvanSix

Garrett Motion

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Garrett Motion are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Garrett Motion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AdvanSix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvanSix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, AdvanSix is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Garrett Motion and AdvanSix

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

The idea behind Garrett Motion and AdvanSix 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.