Correlation Between BorgWarner and DENSO
Can any of the company-specific risk be diversified away by investing in both BorgWarner and DENSO 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 DENSO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BorgWarner and DENSO, you can compare the effects of market volatilities on BorgWarner and DENSO 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 DENSO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and DENSO.
Diversification Opportunities for BorgWarner and DENSO
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BorgWarner and DENSO is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and DENSO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DENSO 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 DENSO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DENSO has no effect on the direction of BorgWarner i.e., BorgWarner and DENSO go up and down completely randomly.
Pair Corralation between BorgWarner and DENSO
Considering the 90-day investment horizon BorgWarner is expected to under-perform the DENSO. But the stock apears to be less risky and, when comparing its historical volatility, BorgWarner is 2.94 times less risky than DENSO. The stock trades about 0.0 of its potential returns per unit of risk. The DENSO is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,565 in DENSO on August 29, 2024 and sell it today you would lose (229.00) from holding DENSO or give up 14.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
BorgWarner vs. DENSO
Performance |
| Timeline |
| BorgWarner |
| DENSO |
BorgWarner and DENSO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BorgWarner and DENSO
The main advantage of trading using opposite BorgWarner and DENSO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner position performs unexpectedly, DENSO 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 DENSO will offset losses from the drop in DENSO's long position.| BorgWarner vs. Lear Corporation | BorgWarner vs. Autoliv | BorgWarner vs. Fox Factory Holding | BorgWarner vs. LKQ Corporation |
| DENSO vs. Bridgestone Corp ADR | DENSO vs. American Axle Manufacturing | DENSO vs. Dana Inc | DENSO vs. Aeva Technologies |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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