Correlation Between Superior Industries and Adient PLC
Can any of the company-specific risk be diversified away by investing in both Superior Industries and Adient PLC 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 Superior Industries and Adient PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Industries International and Adient PLC, you can compare the effects of market volatilities on Superior Industries and Adient PLC 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 Superior Industries with a short position of Adient PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Industries and Adient PLC.
Diversification Opportunities for Superior Industries and Adient PLC
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Superior and Adient is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Superior Industries Internatio and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC and Superior Industries 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 Superior Industries International are associated (or correlated) with Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of Superior Industries i.e., Superior Industries and Adient PLC go up and down completely randomly.
Pair Corralation between Superior Industries and Adient PLC
Considering the 90-day investment horizon Superior Industries International is expected to generate 1.46 times more return on investment than Adient PLC. However, Superior Industries is 1.46 times more volatile than Adient PLC. It trades about -0.02 of its potential returns per unit of risk. Adient PLC is currently generating about -0.04 per unit of risk. If you would invest 408.00 in Superior Industries International on September 2, 2024 and sell it today you would lose (171.00) from holding Superior Industries International or give up 41.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Industries Internatio vs. Adient PLC
Performance |
| Timeline |
| Superior Industries |
| Adient PLC |
Superior Industries and Adient PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Industries and Adient PLC
The main advantage of trading using opposite Superior Industries and Adient PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Industries position performs unexpectedly, Adient PLC 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 Adient PLC will offset losses from the drop in Adient PLC's long position.| Superior Industries vs. Monro Muffler Brake | Superior Industries vs. Dorman Products | Superior Industries vs. Motorcar Parts of | Superior Industries vs. Gentherm |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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