Correlation Between Stoneridge and Lear
Can any of the company-specific risk be diversified away by investing in both Stoneridge and Lear 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 Stoneridge and Lear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stoneridge and Lear Corporation, you can compare the effects of market volatilities on Stoneridge and Lear 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 Stoneridge with a short position of Lear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stoneridge and Lear.
Diversification Opportunities for Stoneridge and Lear
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Stoneridge and Lear is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Stoneridge and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear and Stoneridge 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 Stoneridge are associated (or correlated) with Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of Stoneridge i.e., Stoneridge and Lear go up and down completely randomly.
Pair Corralation between Stoneridge and Lear
Considering the 90-day investment horizon Stoneridge is expected to under-perform the Lear. In addition to that, Stoneridge is 3.26 times more volatile than Lear Corporation. It trades about -0.23 of its total potential returns per unit of risk. Lear Corporation is currently generating about -0.19 per unit of volatility. If you would invest 10,496 in Lear Corporation on August 24, 2024 and sell it today you would lose (859.00) from holding Lear Corporation or give up 8.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stoneridge vs. Lear Corp.
Performance |
| Timeline |
| Stoneridge |
| Lear |
Stoneridge and Lear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stoneridge and Lear
The main advantage of trading using opposite Stoneridge and Lear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoneridge position performs unexpectedly, Lear 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 Lear will offset losses from the drop in Lear's long position.| Stoneridge vs. Monro Muffler Brake | Stoneridge vs. Motorcar Parts of | Stoneridge vs. Standard Motor Products | Stoneridge vs. Douglas Dynamics |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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