Correlation Between BorgWarner and 00206RJG8

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Can any of the company-specific risk be diversified away by investing in both BorgWarner and 00206RJG8 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 00206RJG8 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BorgWarner and T 5375 15 OCT 41, you can compare the effects of market volatilities on BorgWarner and 00206RJG8 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 00206RJG8. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and 00206RJG8.

Diversification Opportunities for BorgWarner and 00206RJG8

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between BorgWarner and 00206RJG8 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and T 5375 15 OCT 41 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T 5375 15 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 00206RJG8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T 5375 15 has no effect on the direction of BorgWarner i.e., BorgWarner and 00206RJG8 go up and down completely randomly.

Pair Corralation between BorgWarner and 00206RJG8

Considering the 90-day investment horizon BorgWarner is expected to generate 0.98 times more return on investment than 00206RJG8. However, BorgWarner is 1.02 times less risky than 00206RJG8. It trades about 0.1 of its potential returns per unit of risk. T 5375 15 OCT 41 is currently generating about -0.03 per unit of risk. If you would invest  3,188  in BorgWarner on September 12, 2024 and sell it today you would earn a total of  322.00  from holding BorgWarner or generate 10.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy46.88%
ValuesDaily Returns

BorgWarner  vs.  T 5375 15 OCT 41

 Performance 
       Timeline  
BorgWarner 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in BorgWarner are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BorgWarner may actually be approaching a critical reversion point that can send shares even higher in January 2025.
T 5375 15 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days T 5375 15 OCT 41 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00206RJG8 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

BorgWarner and 00206RJG8 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BorgWarner and 00206RJG8

The main advantage of trading using opposite BorgWarner and 00206RJG8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner position performs unexpectedly, 00206RJG8 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 00206RJG8 will offset losses from the drop in 00206RJG8's long position.
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The idea behind BorgWarner and T 5375 15 OCT 41 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.
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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 Stocks Directory module to find actively traded stocks across global markets.

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