Correlation Between BorgWarner and U Haul
Can any of the company-specific risk be diversified away by investing in both BorgWarner and U Haul 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 U Haul into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BorgWarner and U Haul Holding, you can compare the effects of market volatilities on BorgWarner and U Haul 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 U Haul. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and U Haul.
Diversification Opportunities for BorgWarner and U Haul
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BorgWarner and UHAL is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and U Haul Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Haul Holding 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 U Haul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Haul Holding has no effect on the direction of BorgWarner i.e., BorgWarner and U Haul go up and down completely randomly.
Pair Corralation between BorgWarner and U Haul
Considering the 90-day investment horizon BorgWarner is expected to generate 3.87 times less return on investment than U Haul. In addition to that, BorgWarner is 1.17 times more volatile than U Haul Holding. It trades about 0.02 of its total potential returns per unit of risk. U Haul Holding is currently generating about 0.08 per unit of volatility. If you would invest 6,287 in U Haul Holding on August 27, 2024 and sell it today you would earn a total of 932.00 from holding U Haul Holding or generate 14.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BorgWarner vs. U Haul Holding
Performance |
| Timeline |
| BorgWarner |
| U Haul Holding |
BorgWarner and U Haul Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BorgWarner and U Haul
The main advantage of trading using opposite BorgWarner and U Haul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner position performs unexpectedly, U Haul 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 U Haul will offset losses from the drop in U Haul's long position.The idea behind BorgWarner and U Haul Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| U Haul vs. Air Lease | U Haul vs. HE Equipment Services | U Haul vs. GATX Corporation | U Haul vs. Custom Truck One |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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