Correlation Between Trimble and Codan

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

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

Diversification Opportunities for Trimble and Codan

0.81

Correlation Coefficient

Trimble  Codan

Very poor diversification

The 3 months correlation between Trimble and Codan is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Trimble and Codan Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codan Limited and Trimble 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 Trimble are associated (or correlated) with Codan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codan Limited has no effect on the direction of Trimble i.e., Trimble and Codan go up and down completely randomly.

Pair Corralation between Trimble and Codan

Given the investment horizon of 90 days Trimble is expected to generate 1.33 times less return on investment than Codan. But when comparing it to its historical volatility, Trimble is 4.4 times less risky than Codan. It trades about 0.42 of its potential returns per unit of risk. Codan Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  730.00  in Codan Limited on April 22, 2025 and sell it today you would earn a total of  329.00  from holding Codan Limited or generate 45.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Trimble  vs.  Codan Limited

Trimble

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Trimble are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Trimble sustained solid returns over the last few months and may actually be approaching a breakup point.

Codan Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Codan Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Codan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trimble and Codan

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

The idea behind Trimble and Codan Limited 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.