Correlation Between Natural Alternatives and BorgWarner
Can any of the company-specific risk be diversified away by investing in both Natural Alternatives 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 Natural Alternatives and BorgWarner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Alternatives International and BorgWarner, you can compare the effects of market volatilities on Natural Alternatives 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 Natural Alternatives with a short position of BorgWarner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Alternatives and BorgWarner.
Diversification Opportunities for Natural Alternatives and BorgWarner
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Natural and BorgWarner is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Natural Alternatives Internati and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and Natural Alternatives 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 Natural Alternatives International 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 Natural Alternatives i.e., Natural Alternatives and BorgWarner go up and down completely randomly.
Pair Corralation between Natural Alternatives and BorgWarner
Given the investment horizon of 90 days Natural Alternatives International is expected to under-perform the BorgWarner. In addition to that, Natural Alternatives is 1.63 times more volatile than BorgWarner. It trades about -0.02 of its total potential returns per unit of risk. BorgWarner is currently generating about 0.01 per unit of volatility. If you would invest 3,535 in BorgWarner on September 3, 2024 and sell it today you would lose (103.00) from holding BorgWarner or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Alternatives Internati vs. BorgWarner
Performance |
| Timeline |
| Natural Alternatives |
| BorgWarner |
Natural Alternatives and BorgWarner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Alternatives and BorgWarner
The main advantage of trading using opposite Natural Alternatives and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Alternatives 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.| Natural Alternatives vs. FitLife Brands, Common | Natural Alternatives vs. Lifeway Foods | Natural Alternatives vs. Else Nutrition Holdings | Natural Alternatives vs. Central Garden Pet |
| BorgWarner vs. Allison Transmission Holdings | BorgWarner vs. Aptiv PLC | BorgWarner vs. LKQ Corporation | BorgWarner vs. Lear 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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