Correlation Between Aptiv PLC and Gentex
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and Gentex 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 Aptiv PLC and Gentex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Gentex, you can compare the effects of market volatilities on Aptiv PLC and Gentex 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 Aptiv PLC with a short position of Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Gentex.
Diversification Opportunities for Aptiv PLC and Gentex
Excellent diversification
The 3 months correlation between Aptiv and Gentex is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex and Aptiv PLC 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 Aptiv PLC are associated (or correlated) with Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Gentex go up and down completely randomly.
Pair Corralation between Aptiv PLC and Gentex
Assuming the 90 days horizon Aptiv PLC is expected to generate 1.16 times more return on investment than Gentex. However, Aptiv PLC is 1.16 times more volatile than Gentex. It trades about 0.14 of its potential returns per unit of risk. Gentex is currently generating about -0.04 per unit of risk. If you would invest 5,250 in Aptiv PLC on September 23, 2024 and sell it today you would earn a total of 237.00 from holding Aptiv PLC or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aptiv PLC vs. Gentex
Performance |
| Timeline |
| Aptiv PLC |
| Gentex |
Aptiv PLC and Gentex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Gentex
The main advantage of trading using opposite Aptiv PLC and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, Gentex 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 Gentex will offset losses from the drop in Gentex's long position.| Aptiv PLC vs. Dno ASA | Aptiv PLC vs. DENSO P ADR | Aptiv PLC vs. PT Astra International | 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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