Correlation Between BorgWarner and Mullen Automotive
Can any of the company-specific risk be diversified away by investing in both BorgWarner and Mullen Automotive 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 Mullen Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BorgWarner and Mullen Automotive, you can compare the effects of market volatilities on BorgWarner and Mullen Automotive 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 Mullen Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and Mullen Automotive.
Diversification Opportunities for BorgWarner and Mullen Automotive
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BorgWarner and Mullen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Mullen Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Automotive 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 Mullen Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Automotive has no effect on the direction of BorgWarner i.e., BorgWarner and Mullen Automotive go up and down completely randomly.
Pair Corralation between BorgWarner and Mullen Automotive
Considering the 90-day investment horizon BorgWarner is expected to generate 0.1 times more return on investment than Mullen Automotive. However, BorgWarner is 9.91 times less risky than Mullen Automotive. It trades about 0.11 of its potential returns per unit of risk. Mullen Automotive is currently generating about -0.32 per unit of risk. If you would invest 3,148 in BorgWarner on October 20, 2024 and sell it today you would earn a total of 81.00 from holding BorgWarner or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BorgWarner vs. Mullen Automotive
Performance |
| Timeline |
| BorgWarner |
| Mullen Automotive |
BorgWarner and Mullen Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BorgWarner and Mullen Automotive
The main advantage of trading using opposite BorgWarner and Mullen Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner position performs unexpectedly, Mullen Automotive 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 Mullen Automotive will offset losses from the drop in Mullen Automotive's long position.| BorgWarner vs. Lear Corporation | BorgWarner vs. Autoliv | BorgWarner vs. Fox Factory Holding | BorgWarner vs. LKQ 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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