Correlation Between Luminar Technologies and BorgWarner
Can any of the company-specific risk be diversified away by investing in both Luminar Technologies 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 Luminar Technologies and BorgWarner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luminar Technologies and BorgWarner, you can compare the effects of market volatilities on Luminar Technologies 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 Luminar Technologies with a short position of BorgWarner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luminar Technologies and BorgWarner.
Diversification Opportunities for Luminar Technologies and BorgWarner
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Luminar and BorgWarner is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Luminar Technologies and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and Luminar Technologies 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 Luminar Technologies 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 Luminar Technologies i.e., Luminar Technologies and BorgWarner go up and down completely randomly.
Pair Corralation between Luminar Technologies and BorgWarner
Given the investment horizon of 90 days Luminar Technologies is expected to under-perform the BorgWarner. In addition to that, Luminar Technologies is 3.7 times more volatile than BorgWarner. It trades about -0.08 of its total potential returns per unit of risk. BorgWarner is currently generating about -0.01 per unit of volatility. If you would invest 3,571 in BorgWarner on August 25, 2024 and sell it today you would lose (159.00) from holding BorgWarner or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luminar Technologies vs. BorgWarner
Performance |
| Timeline |
| Luminar Technologies |
| BorgWarner |
Luminar Technologies and BorgWarner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luminar Technologies and BorgWarner
The main advantage of trading using opposite Luminar Technologies and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luminar Technologies 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.| Luminar Technologies vs. Mobileye Global Class | Luminar Technologies vs. Hyliion Holdings Corp | Luminar Technologies vs. Aeva Technologies | Luminar Technologies vs. Innoviz Technologies |
| BorgWarner vs. Fox Factory Holding | BorgWarner vs. LKQ Corporation | BorgWarner vs. Commercial Vehicle Group | BorgWarner vs. Gentex |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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