Correlation Between Oatly Group and BorgWarner
Can any of the company-specific risk be diversified away by investing in both Oatly Group 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 Oatly Group and BorgWarner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oatly Group AB and BorgWarner, you can compare the effects of market volatilities on Oatly Group 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 Oatly Group with a short position of BorgWarner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oatly Group and BorgWarner.
Diversification Opportunities for Oatly Group and BorgWarner
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oatly and BorgWarner is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and Oatly Group 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 Oatly Group AB 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 Oatly Group i.e., Oatly Group and BorgWarner go up and down completely randomly.
Pair Corralation between Oatly Group and BorgWarner
Given the investment horizon of 90 days Oatly Group AB is expected to generate 2.63 times more return on investment than BorgWarner. However, Oatly Group is 2.63 times more volatile than BorgWarner. It trades about -0.06 of its potential returns per unit of risk. BorgWarner is currently generating about -0.31 per unit of risk. If you would invest 69.00 in Oatly Group AB on October 14, 2024 and sell it today you would lose (4.00) from holding Oatly Group AB or give up 5.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oatly Group AB vs. BorgWarner
Performance |
| Timeline |
| Oatly Group AB |
| BorgWarner |
Oatly Group and BorgWarner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oatly Group and BorgWarner
The main advantage of trading using opposite Oatly Group and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oatly Group 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.| Oatly Group vs. Monster Beverage Corp | Oatly Group vs. Vita Coco | Oatly Group vs. PepsiCo | Oatly Group vs. The Coca Cola |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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