Correlation Between Dana and Commercial Vehicle
Can any of the company-specific risk be diversified away by investing in both Dana and Commercial Vehicle 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 Dana and Commercial Vehicle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Inc and Commercial Vehicle Group, you can compare the effects of market volatilities on Dana and Commercial Vehicle 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 Dana with a short position of Commercial Vehicle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and Commercial Vehicle.
Diversification Opportunities for Dana and Commercial Vehicle
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dana and Commercial is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle and Dana 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 Dana Inc are associated (or correlated) with Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of Dana i.e., Dana and Commercial Vehicle go up and down completely randomly.
Pair Corralation between Dana and Commercial Vehicle
Considering the 90-day investment horizon Dana Inc is expected to generate 0.72 times more return on investment than Commercial Vehicle. However, Dana Inc is 1.38 times less risky than Commercial Vehicle. It trades about -0.15 of its potential returns per unit of risk. Commercial Vehicle Group is currently generating about -0.12 per unit of risk. If you would invest 1,008 in Dana Inc on August 24, 2024 and sell it today you would lose (180.00) from holding Dana Inc or give up 17.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Inc vs. Commercial Vehicle Group
Performance |
| Timeline |
| Dana Inc |
| Commercial Vehicle |
Dana and Commercial Vehicle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana and Commercial Vehicle
The main advantage of trading using opposite Dana and Commercial Vehicle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana position performs unexpectedly, Commercial Vehicle 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 Commercial Vehicle will offset losses from the drop in Commercial Vehicle's long position.The idea behind Dana Inc and Commercial Vehicle Group 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.| Commercial Vehicle vs. Motorcar Parts of | Commercial Vehicle vs. Monro Muffler Brake | Commercial Vehicle vs. Stoneridge | Commercial Vehicle vs. Superior Industries 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |