Correlation Between Dana and BOARDWALK

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

Diversification Opportunities for Dana and BOARDWALK

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Dana and BOARDWALK is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and BOARDWALK PIPELINES LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOARDWALK PIPELINES 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 BOARDWALK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOARDWALK PIPELINES has no effect on the direction of Dana i.e., Dana and BOARDWALK go up and down completely randomly.

Pair Corralation between Dana and BOARDWALK

Considering the 90-day investment horizon Dana Inc is expected to under-perform the BOARDWALK. In addition to that, Dana is 7.54 times more volatile than BOARDWALK PIPELINES LP. It trades about -0.01 of its total potential returns per unit of risk. BOARDWALK PIPELINES LP is currently generating about 0.02 per unit of volatility. If you would invest  10,188  in BOARDWALK PIPELINES LP on August 30, 2024 and sell it today you would earn a total of  206.00  from holding BOARDWALK PIPELINES LP or generate 2.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.43%
ValuesDaily Returns

Dana Inc  vs.  BOARDWALK PIPELINES LP

 Performance 
       Timeline  
Dana Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dana Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dana is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
BOARDWALK PIPELINES 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in BOARDWALK PIPELINES LP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BOARDWALK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dana and BOARDWALK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dana and BOARDWALK

The main advantage of trading using opposite Dana and BOARDWALK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana position performs unexpectedly, BOARDWALK 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 BOARDWALK will offset losses from the drop in BOARDWALK's long position.
The idea behind Dana Inc and BOARDWALK PIPELINES LP 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.
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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