Correlation Between BTB Real and BorgWarner
Can any of the company-specific risk be diversified away by investing in both BTB Real and BorgWarner 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 BTB Real and BorgWarner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTB Real Estate and BorgWarner, you can compare the effects of market volatilities on BTB Real and BorgWarner 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 BTB Real with a short position of BorgWarner. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTB Real and BorgWarner.
Diversification Opportunities for BTB Real and BorgWarner
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BTB and BorgWarner is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BTB Real Estate and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and BTB Real 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 BTB Real Estate are associated (or correlated) with BorgWarner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BorgWarner has no effect on the direction of BTB Real i.e., BTB Real and BorgWarner go up and down completely randomly.
Pair Corralation between BTB Real and BorgWarner
Assuming the 90 days horizon BTB Real Estate is expected to generate 0.96 times more return on investment than BorgWarner. However, BTB Real Estate is 1.04 times less risky than BorgWarner. It trades about 0.08 of its potential returns per unit of risk. BorgWarner is currently generating about 0.02 per unit of risk. If you would invest 192.00 in BTB Real Estate on September 3, 2024 and sell it today you would earn a total of 60.00 from holding BTB Real Estate or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.78% |
| Values | Daily Returns |
BTB Real Estate vs. BorgWarner
Performance |
| Timeline |
| BTB Real Estate |
| BorgWarner |
BTB Real and BorgWarner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTB Real and BorgWarner
The main advantage of trading using opposite BTB Real and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTB Real position performs unexpectedly, BorgWarner 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 BorgWarner will offset losses from the drop in BorgWarner's long position.| BTB Real vs. City Office | BTB Real vs. Vornado Realty Trust | BTB Real vs. Cousins Properties Incorporated | BTB Real vs. Highwoods Properties |
| BorgWarner vs. Allison Transmission Holdings | BorgWarner vs. Aptiv PLC | BorgWarner vs. LKQ Corporation | BorgWarner 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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