Correlation Between Uber Technologies and BorgWarner
Can any of the company-specific risk be diversified away by investing in both Uber Technologies 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 Uber Technologies and BorgWarner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and BorgWarner, you can compare the effects of market volatilities on Uber Technologies 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 Uber Technologies with a short position of BorgWarner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and BorgWarner.
Diversification Opportunities for Uber Technologies and BorgWarner
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Uber and BorgWarner is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and BorgWarner go up and down completely randomly.
Pair Corralation between Uber Technologies and BorgWarner
Given the investment horizon of 90 days Uber Technologies is expected to under-perform the BorgWarner. In addition to that, Uber Technologies is 1.59 times more volatile than BorgWarner. It trades about -0.08 of its total potential returns per unit of risk. BorgWarner is currently generating about 0.07 per unit of volatility. If you would invest 3,441 in BorgWarner on August 28, 2024 and sell it today you would earn a total of 77.00 from holding BorgWarner or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uber Technologies vs. BorgWarner
Performance |
| Timeline |
| Uber Technologies |
| BorgWarner |
Uber Technologies and BorgWarner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uber Technologies and BorgWarner
The main advantage of trading using opposite Uber Technologies and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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.| Uber Technologies vs. Kingsoft Cloud Holdings | Uber Technologies vs. AMTD Digital | Uber Technologies vs. Zoom Video Communications | Uber Technologies vs. Snowflake |
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 CEOs Directory module to screen CEOs from public companies around the world.
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