Correlation Between Krispy Kreme and BorgWarner
Can any of the company-specific risk be diversified away by investing in both Krispy Kreme and BorgWarner 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 Krispy Kreme and BorgWarner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krispy Kreme and BorgWarner, you can compare the effects of market volatilities on Krispy Kreme and BorgWarner 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 Krispy Kreme with a short position of BorgWarner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krispy Kreme and BorgWarner.
Diversification Opportunities for Krispy Kreme and BorgWarner
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Krispy and BorgWarner is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and Krispy Kreme 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 Krispy Kreme are associated (or correlated) with BorgWarner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BorgWarner has no effect on the direction of Krispy Kreme i.e., Krispy Kreme and BorgWarner go up and down completely randomly.
Pair Corralation between Krispy Kreme and BorgWarner
Given the investment horizon of 90 days Krispy Kreme is expected to under-perform the BorgWarner. In addition to that, Krispy Kreme is 1.54 times more volatile than BorgWarner. It trades about 0.0 of its total potential returns per unit of risk. BorgWarner is currently generating about 0.01 per unit of volatility. If you would invest 3,480 in BorgWarner on August 30, 2024 and sell it today you would lose (52.00) from holding BorgWarner or give up 1.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krispy Kreme vs. BorgWarner
Performance |
| Timeline |
| Krispy Kreme |
| BorgWarner |
Krispy Kreme and BorgWarner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krispy Kreme and BorgWarner
The main advantage of trading using opposite Krispy Kreme and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krispy Kreme position performs unexpectedly, BorgWarner 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 BorgWarner will offset losses from the drop in BorgWarner's long position.| Krispy Kreme vs. Sendas Distribuidora SA | Krispy Kreme vs. Natural Grocers by | Krispy Kreme vs. Sprouts Farmers Market | Krispy Kreme vs. Albertsons Companies |
| BorgWarner vs. Lear Corporation | BorgWarner vs. Autoliv | BorgWarner vs. Fox Factory Holding | BorgWarner vs. LKQ Corporation |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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