Correlation Between BorgWarner and Socket Mobile
Can any of the company-specific risk be diversified away by investing in both BorgWarner and Socket Mobile 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 Socket Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BorgWarner and Socket Mobile, you can compare the effects of market volatilities on BorgWarner and Socket Mobile 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 Socket Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and Socket Mobile.
Diversification Opportunities for BorgWarner and Socket Mobile
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BorgWarner and Socket is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Socket Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socket Mobile 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 Socket Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socket Mobile has no effect on the direction of BorgWarner i.e., BorgWarner and Socket Mobile go up and down completely randomly.
Pair Corralation between BorgWarner and Socket Mobile
Considering the 90-day investment horizon BorgWarner is expected to under-perform the Socket Mobile. But the stock apears to be less risky and, when comparing its historical volatility, BorgWarner is 2.75 times less risky than Socket Mobile. The stock trades about 0.0 of its potential returns per unit of risk. The Socket Mobile is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 122.00 in Socket Mobile on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Socket Mobile or generate 16.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BorgWarner vs. Socket Mobile
Performance |
| Timeline |
| BorgWarner |
| Socket Mobile |
BorgWarner and Socket Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BorgWarner and Socket Mobile
The main advantage of trading using opposite BorgWarner and Socket Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner position performs unexpectedly, Socket Mobile 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 Socket Mobile will offset losses from the drop in Socket Mobile's long position.| BorgWarner vs. Lear Corporation | BorgWarner vs. Autoliv | BorgWarner vs. Fox Factory Holding | BorgWarner vs. LKQ Corporation |
| Socket Mobile vs. Cricut Inc | Socket Mobile vs. Nano Dimension | Socket Mobile vs. IONQ Inc | Socket Mobile vs. AGM Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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