Correlation Between Aptiv PLC and Worksport
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and Worksport 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 Worksport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Worksport, you can compare the effects of market volatilities on Aptiv PLC and Worksport 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 Worksport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Worksport.
Diversification Opportunities for Aptiv PLC and Worksport
Very good diversification
The 3 months correlation between Aptiv and Worksport is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Worksport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worksport 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 Worksport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worksport has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Worksport go up and down completely randomly.
Pair Corralation between Aptiv PLC and Worksport
Given the investment horizon of 90 days Aptiv PLC is expected to generate 0.35 times more return on investment than Worksport. However, Aptiv PLC is 2.89 times less risky than Worksport. It trades about -0.05 of its potential returns per unit of risk. Worksport is currently generating about -0.02 per unit of risk. If you would invest 7,983 in Aptiv PLC on September 3, 2024 and sell it today you would lose (2,430) from holding Aptiv PLC or give up 30.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. Worksport
Performance |
| Timeline |
| Aptiv PLC |
| Worksport |
Aptiv PLC and Worksport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Worksport
The main advantage of trading using opposite Aptiv PLC and Worksport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, Worksport 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 Worksport will offset losses from the drop in Worksport's long position.| Aptiv PLC vs. Allison Transmission Holdings | Aptiv PLC vs. LKQ Corporation | Aptiv PLC vs. Lear Corporation | Aptiv PLC vs. Magna International |
| Worksport vs. Allison Transmission Holdings | Worksport vs. Aptiv PLC | Worksport vs. LKQ Corporation | Worksport 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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