Correlation Between Gentherm and Adient PLC
Can any of the company-specific risk be diversified away by investing in both Gentherm and Adient PLC 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 Gentherm and Adient PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentherm and Adient PLC, you can compare the effects of market volatilities on Gentherm and Adient PLC 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 Gentherm with a short position of Adient PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentherm and Adient PLC.
Diversification Opportunities for Gentherm and Adient PLC
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gentherm and Adient is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gentherm and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC and Gentherm 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 Gentherm are associated (or correlated) with Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of Gentherm i.e., Gentherm and Adient PLC go up and down completely randomly.
Pair Corralation between Gentherm and Adient PLC
Given the investment horizon of 90 days Gentherm is expected to generate 0.7 times more return on investment than Adient PLC. However, Gentherm is 1.43 times less risky than Adient PLC. It trades about -0.18 of its potential returns per unit of risk. Adient PLC is currently generating about -0.16 per unit of risk. If you would invest 4,788 in Gentherm on September 23, 2024 and sell it today you would lose (925.00) from holding Gentherm or give up 19.32% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Gentherm vs. Adient PLC
Performance |
Timeline |
Gentherm |
Adient PLC |
Gentherm and Adient PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gentherm and Adient PLC
The main advantage of trading using opposite Gentherm and Adient PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentherm position performs unexpectedly, Adient PLC 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 Adient PLC will offset losses from the drop in Adient PLC's long position.Gentherm vs. Monro Muffler Brake | Gentherm vs. Motorcar Parts of | Gentherm vs. Standard Motor Products | Gentherm vs. Stoneridge |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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