Correlation Between Autoliv and Cooper Stnd
Can any of the company-specific risk be diversified away by investing in both Autoliv and Cooper Stnd 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 Autoliv and Cooper Stnd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autoliv and Cooper Stnd, you can compare the effects of market volatilities on Autoliv and Cooper Stnd 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 Autoliv with a short position of Cooper Stnd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and Cooper Stnd.
Diversification Opportunities for Autoliv and Cooper Stnd
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Autoliv and Cooper is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Cooper Stnd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Stnd and Autoliv 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 Autoliv are associated (or correlated) with Cooper Stnd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Stnd has no effect on the direction of Autoliv i.e., Autoliv and Cooper Stnd go up and down completely randomly.
Pair Corralation between Autoliv and Cooper Stnd
Considering the 90-day investment horizon Autoliv is expected to generate 1.93 times less return on investment than Cooper Stnd. But when comparing it to its historical volatility, Autoliv is 2.56 times less risky than Cooper Stnd. It trades about 0.12 of its potential returns per unit of risk. Cooper Stnd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,369 in Cooper Stnd on August 27, 2024 and sell it today you would earn a total of 99.00 from holding Cooper Stnd or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autoliv vs. Cooper Stnd
Performance |
| Timeline |
| Autoliv |
| Cooper Stnd |
Autoliv and Cooper Stnd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autoliv and Cooper Stnd
The main advantage of trading using opposite Autoliv and Cooper Stnd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv position performs unexpectedly, Cooper Stnd 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 Cooper Stnd will offset losses from the drop in Cooper Stnd's long position.The idea behind Autoliv and Cooper Stnd 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.| Cooper Stnd vs. Dorman Products | Cooper Stnd vs. Monro Muffler Brake | Cooper Stnd vs. Standard Motor Products | Cooper Stnd 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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