Correlation Between BorgWarner and Quantumscape Corp
Can any of the company-specific risk be diversified away by investing in both BorgWarner and Quantumscape Corp 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 Quantumscape Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BorgWarner and Quantumscape Corp, you can compare the effects of market volatilities on BorgWarner and Quantumscape Corp 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 Quantumscape Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and Quantumscape Corp.
Diversification Opportunities for BorgWarner and Quantumscape Corp
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BorgWarner and Quantumscape is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Quantumscape Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantumscape Corp 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 Quantumscape Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantumscape Corp has no effect on the direction of BorgWarner i.e., BorgWarner and Quantumscape Corp go up and down completely randomly.
Pair Corralation between BorgWarner and Quantumscape Corp
Considering the 90-day investment horizon BorgWarner is expected to generate 4.87 times less return on investment than Quantumscape Corp. But when comparing it to its historical volatility, BorgWarner is 2.7 times less risky than Quantumscape Corp. It trades about 0.01 of its potential returns per unit of risk. Quantumscape Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 696.00 in Quantumscape Corp on August 29, 2024 and sell it today you would lose (180.00) from holding Quantumscape Corp or give up 25.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BorgWarner vs. Quantumscape Corp
Performance |
| Timeline |
| BorgWarner |
| Quantumscape Corp |
BorgWarner and Quantumscape Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BorgWarner and Quantumscape Corp
The main advantage of trading using opposite BorgWarner and Quantumscape Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner position performs unexpectedly, Quantumscape Corp 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 Quantumscape Corp will offset losses from the drop in Quantumscape Corp's long position.| BorgWarner vs. Lear Corporation | BorgWarner vs. Autoliv | BorgWarner vs. Fox Factory Holding | BorgWarner vs. LKQ Corporation |
| Quantumscape Corp vs. Mobileye Global Class | Quantumscape Corp vs. Innoviz Technologies | Quantumscape Corp vs. Aeva Technologies | Quantumscape Corp vs. Hyliion Holdings Corp |
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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