Correlation Between Custom Truck and Aptiv PLC
Can any of the company-specific risk be diversified away by investing in both Custom Truck and Aptiv PLC 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 Custom Truck and Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Custom Truck One and Aptiv PLC, you can compare the effects of market volatilities on Custom Truck and Aptiv PLC 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 Custom Truck with a short position of Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and Aptiv PLC.
Diversification Opportunities for Custom Truck and Aptiv PLC
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Custom and Aptiv is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and Custom Truck 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 Custom Truck One are associated (or correlated) with Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Custom Truck i.e., Custom Truck and Aptiv PLC go up and down completely randomly.
Pair Corralation between Custom Truck and Aptiv PLC
Given the investment horizon of 90 days Custom Truck One is expected to under-perform the Aptiv PLC. In addition to that, Custom Truck is 1.84 times more volatile than Aptiv PLC. It trades about -0.05 of its total potential returns per unit of risk. Aptiv PLC is currently generating about 0.29 per unit of volatility. If you would invest 5,701 in Aptiv PLC on October 20, 2024 and sell it today you would earn a total of 415.00 from holding Aptiv PLC or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Custom Truck One vs. Aptiv PLC
Performance |
| Timeline |
| Custom Truck One |
| Aptiv PLC |
Custom Truck and Aptiv PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Custom Truck and Aptiv PLC
The main advantage of trading using opposite Custom Truck and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck position performs unexpectedly, Aptiv PLC 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. HE Equipment Services | Custom Truck vs. GATX Corporation |
| Aptiv PLC vs. Allison Transmission Holdings | Aptiv PLC vs. LKQ Corporation | Aptiv PLC vs. Lear Corporation | Aptiv PLC vs. Magna International |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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