Correlation Between Fox Factory and BorgWarner
Can any of the company-specific risk be diversified away by investing in both Fox Factory 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 Fox Factory and BorgWarner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fox Factory Holding and BorgWarner, you can compare the effects of market volatilities on Fox Factory 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 Fox Factory with a short position of BorgWarner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fox Factory and BorgWarner.
Diversification Opportunities for Fox Factory and BorgWarner
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fox and BorgWarner is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and Fox Factory 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 Fox Factory Holding 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 Fox Factory i.e., Fox Factory and BorgWarner go up and down completely randomly.
Pair Corralation between Fox Factory and BorgWarner
Given the investment horizon of 90 days Fox Factory Holding is expected to under-perform the BorgWarner. In addition to that, Fox Factory is 1.63 times more volatile than BorgWarner. It trades about -0.07 of its total potential returns per unit of risk. BorgWarner is currently generating about -0.01 per unit of volatility. If you would invest 3,956 in BorgWarner on October 20, 2024 and sell it today you would lose (727.00) from holding BorgWarner or give up 18.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fox Factory Holding vs. BorgWarner
Performance |
| Timeline |
| Fox Factory Holding |
| BorgWarner |
Fox Factory and BorgWarner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fox Factory and BorgWarner
The main advantage of trading using opposite Fox Factory and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Factory 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.| Fox Factory vs. Dorman Products | Fox Factory vs. Malibu Boats | Fox Factory vs. Installed Building Products | Fox Factory vs. ExlService Holdings |
| BorgWarner vs. Mobileye Global Class | BorgWarner vs. Innoviz Technologies | BorgWarner vs. Aeva Technologies | BorgWarner vs. Hyliion Holdings Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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