Correlation Between BorgWarner and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both BorgWarner and CarsalesCom 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 BorgWarner and CarsalesCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BorgWarner and CarsalesCom Ltd ADR, you can compare the effects of market volatilities on BorgWarner and CarsalesCom 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 BorgWarner with a short position of CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and CarsalesCom.
Diversification Opportunities for BorgWarner and CarsalesCom
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BorgWarner and CarsalesCom is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR and BorgWarner 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 BorgWarner are associated (or correlated) with CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of BorgWarner i.e., BorgWarner and CarsalesCom go up and down completely randomly.
Pair Corralation between BorgWarner and CarsalesCom
Considering the 90-day investment horizon BorgWarner is expected to generate 6.73 times less return on investment than CarsalesCom. But when comparing it to its historical volatility, BorgWarner is 1.25 times less risky than CarsalesCom. It trades about 0.02 of its potential returns per unit of risk. CarsalesCom Ltd ADR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,675 in CarsalesCom Ltd ADR on September 4, 2024 and sell it today you would earn a total of 1,732 from holding CarsalesCom Ltd ADR or generate 47.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.26% |
| Values | Daily Returns |
BorgWarner vs. CarsalesCom Ltd ADR
Performance |
| Timeline |
| BorgWarner |
| CarsalesCom ADR |
BorgWarner and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BorgWarner and CarsalesCom
The main advantage of trading using opposite BorgWarner and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| BorgWarner vs. Lear Corporation | BorgWarner vs. Autoliv | BorgWarner vs. Fox Factory Holding | BorgWarner vs. LKQ Corporation |
| CarsalesCom vs. Quizam Media | CarsalesCom vs. DGTL Holdings | CarsalesCom vs. Tinybeans Group Limited | CarsalesCom vs. Sabio Holdings |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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