Correlation Between Aptiv PLC and Adient PLC
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and Adient PLC 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 Aptiv PLC and Adient PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Adient PLC, you can compare the effects of market volatilities on Aptiv PLC and Adient PLC 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 Aptiv PLC with a short position of Adient PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Adient PLC.
Diversification Opportunities for Aptiv PLC and Adient PLC
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aptiv and Adient is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC and Aptiv 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 Aptiv PLC are associated (or correlated) with Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Adient PLC go up and down completely randomly.
Pair Corralation between Aptiv PLC and Adient PLC
Given the investment horizon of 90 days Aptiv PLC is expected to under-perform the Adient PLC. In addition to that, Aptiv PLC is 1.78 times more volatile than Adient PLC. It trades about -0.29 of its total potential returns per unit of risk. Adient PLC is currently generating about -0.21 per unit of volatility. If you would invest 2,129 in Adient PLC on August 24, 2024 and sell it today you would lose (223.00) from holding Adient PLC or give up 10.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. Adient PLC
Performance |
| Timeline |
| Aptiv PLC |
| Adient PLC |
Aptiv PLC and Adient PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Adient PLC
The main advantage of trading using opposite Aptiv PLC and Adient PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, Adient PLC 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 Adient PLC will offset losses from the drop in Adient PLC's long position.| Aptiv PLC vs. Allison Transmission Holdings | Aptiv PLC vs. LKQ Corporation | Aptiv PLC vs. Lear Corporation | Aptiv PLC vs. Magna International |
| Adient PLC vs. Gentex | Adient PLC vs. Fox Factory Holding | Adient PLC vs. Dana Inc | Adient PLC vs. Lear Corporation |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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