Correlation Between Adient PLC and Dana
Can any of the company-specific risk be diversified away by investing in both Adient PLC and Dana 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 Dana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adient PLC and Dana Inc, you can compare the effects of market volatilities on Adient PLC and Dana 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 Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and Dana.
Diversification Opportunities for Adient PLC and Dana
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adient and Dana is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana 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 Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Adient PLC i.e., Adient PLC and Dana go up and down completely randomly.
Pair Corralation between Adient PLC and Dana
Given the investment horizon of 90 days Adient PLC is expected to generate 40.41 times less return on investment than Dana. But when comparing it to its historical volatility, Adient PLC is 1.54 times less risky than Dana. It trades about 0.01 of its potential returns per unit of risk. Dana Inc is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,292 in Dana Inc on November 18, 2024 and sell it today you would earn a total of 343.00 from holding Dana Inc or generate 26.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adient PLC vs. Dana Inc
Performance |
| Timeline |
| Adient PLC |
| Dana Inc |
Adient PLC and Dana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adient PLC and Dana
The main advantage of trading using opposite Adient PLC and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana'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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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