Correlation Between Adient PLC and Standard
Can any of the company-specific risk be diversified away by investing in both Adient PLC and Standard 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 Standard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adient PLC and Standard Motor Products, you can compare the effects of market volatilities on Adient PLC and Standard 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 Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and Standard.
Diversification Opportunities for Adient PLC and Standard
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Adient and Standard is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and Standard Motor Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Motor Products 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 Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Motor Products has no effect on the direction of Adient PLC i.e., Adient PLC and Standard go up and down completely randomly.
Pair Corralation between Adient PLC and Standard
Given the investment horizon of 90 days Adient PLC is expected to under-perform the Standard. But the stock apears to be less risky and, when comparing its historical volatility, Adient PLC is 2.07 times less risky than Standard. The stock trades about -0.14 of its potential returns per unit of risk. The Standard Motor Products is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,900 in Standard Motor Products on August 26, 2024 and sell it today you would earn a total of 414.00 from holding Standard Motor Products or generate 14.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adient PLC vs. Standard Motor Products
Performance |
| Timeline |
| Adient PLC |
| Standard Motor Products |
Adient PLC and Standard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adient PLC and Standard
The main advantage of trading using opposite Adient PLC and Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC position performs unexpectedly, Standard 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 Standard will offset losses from the drop in Standard's long position.| Adient PLC vs. Gentex | Adient PLC vs. Autoliv | Adient PLC vs. Fox Factory Holding | Adient PLC vs. Dana Inc |
| Standard vs. Dorman Products | Standard vs. Motorcar Parts of | Standard vs. Douglas Dynamics | Standard vs. Stoneridge |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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