Correlation Between Adient PLC and Autoliv
Can any of the company-specific risk be diversified away by investing in both Adient PLC and Autoliv 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 Adient PLC and Autoliv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adient PLC and Autoliv, you can compare the effects of market volatilities on Adient PLC and Autoliv 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 Adient PLC with a short position of Autoliv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and Autoliv.
Diversification Opportunities for Adient PLC and Autoliv
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Adient and Autoliv is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and Adient PLC 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 Adient PLC are associated (or correlated) with Autoliv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoliv has no effect on the direction of Adient PLC i.e., Adient PLC and Autoliv go up and down completely randomly.
Pair Corralation between Adient PLC and Autoliv
Given the investment horizon of 90 days Adient PLC is expected to under-perform the Autoliv. In addition to that, Adient PLC is 1.15 times more volatile than Autoliv. It trades about -0.23 of its total potential returns per unit of risk. Autoliv is currently generating about 0.02 per unit of volatility. If you would invest 9,740 in Autoliv on August 23, 2024 and sell it today you would earn a total of 40.00 from holding Autoliv or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adient PLC vs. Autoliv
Performance |
| Timeline |
| Adient PLC |
| Autoliv |
Adient PLC and Autoliv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adient PLC and Autoliv
The main advantage of trading using opposite Adient PLC and Autoliv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC position performs unexpectedly, Autoliv 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 Autoliv will offset losses from the drop in Autoliv's long position.| Adient PLC vs. Gentex | Adient PLC vs. Autoliv | Adient PLC vs. Fox Factory Holding | Adient PLC vs. Dana Inc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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