Correlation Between Marine Products and BorgWarner
Can any of the company-specific risk be diversified away by investing in both Marine Products 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 Marine Products and BorgWarner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marine Products and BorgWarner, you can compare the effects of market volatilities on Marine Products 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 Marine Products with a short position of BorgWarner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marine Products and BorgWarner.
Diversification Opportunities for Marine Products and BorgWarner
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marine and BorgWarner is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and Marine Products 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 Marine Products 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 Marine Products i.e., Marine Products and BorgWarner go up and down completely randomly.
Pair Corralation between Marine Products and BorgWarner
Considering the 90-day investment horizon Marine Products is expected to generate 1.0 times more return on investment than BorgWarner. However, Marine Products is 1.0 times more volatile than BorgWarner. It trades about 0.13 of its potential returns per unit of risk. BorgWarner is currently generating about 0.06 per unit of risk. If you would invest 940.00 in Marine Products on August 31, 2024 and sell it today you would earn a total of 46.00 from holding Marine Products or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marine Products vs. BorgWarner
Performance |
| Timeline |
| Marine Products |
| BorgWarner |
Marine Products and BorgWarner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marine Products and BorgWarner
The main advantage of trading using opposite Marine Products and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marine Products 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.| Marine Products vs. Vision Marine Technologies | Marine Products vs. EZGO Technologies | Marine Products vs. LCI Industries | Marine Products vs. Curtiss Motorcycles |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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