Correlation Between Adient PLC and Cars
Can any of the company-specific risk be diversified away by investing in both Adient PLC and Cars 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 Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adient PLC and Cars Inc, you can compare the effects of market volatilities on Adient PLC and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and Cars.
Diversification Opportunities for Adient PLC and Cars
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adient and Cars is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Adient PLC i.e., Adient PLC and Cars go up and down completely randomly.
Pair Corralation between Adient PLC and Cars
Given the investment horizon of 90 days Adient PLC is expected to under-perform the Cars. In addition to that, Adient PLC is 1.16 times more volatile than Cars Inc. It trades about -0.09 of its total potential returns per unit of risk. Cars Inc is currently generating about 0.08 per unit of volatility. If you would invest 1,784 in Cars Inc on August 30, 2024 and sell it today you would earn a total of 186.00 from holding Cars Inc or generate 10.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adient PLC vs. Cars Inc
Performance |
| Timeline |
| Adient PLC |
| Cars Inc |
Adient PLC and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adient PLC and Cars
The main advantage of trading using opposite Adient PLC and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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