Correlation Between Aptiv PLC and Allegroeu
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and Allegroeu 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 Allegroeu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Allegroeu SA, you can compare the effects of market volatilities on Aptiv PLC and Allegroeu 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 Allegroeu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Allegroeu.
Diversification Opportunities for Aptiv PLC and Allegroeu
Good diversification
The 3 months correlation between Aptiv and Allegroeu is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Allegroeu SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegroeu SA 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 Allegroeu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegroeu SA has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Allegroeu go up and down completely randomly.
Pair Corralation between Aptiv PLC and Allegroeu
Given the investment horizon of 90 days Aptiv PLC is expected to generate 2.55 times less return on investment than Allegroeu. But when comparing it to its historical volatility, Aptiv PLC is 2.54 times less risky than Allegroeu. It trades about 0.22 of its potential returns per unit of risk. Allegroeu SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 671.00 in Allegroeu SA on December 4, 2024 and sell it today you would earn a total of 94.00 from holding Allegroeu SA or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. Allegroeu SA
Performance |
| Timeline |
| Aptiv PLC |
| Allegroeu SA |
Aptiv PLC and Allegroeu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Allegroeu
The main advantage of trading using opposite Aptiv PLC and Allegroeu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, Allegroeu 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 Allegroeu will offset losses from the drop in Allegroeu's long position.| Aptiv PLC vs. Allison Transmission Holdings | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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