Correlation Between Montana Technologies and Aptiv PLC

Can any of the company-specific risk be diversified away by investing in both Montana Technologies and Aptiv 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 Montana Technologies and Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Montana Technologies and Aptiv PLC, you can compare the effects of market volatilities on Montana Technologies and Aptiv 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 Montana Technologies with a short position of Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montana Technologies and Aptiv PLC.

Diversification Opportunities for Montana Technologies and Aptiv PLC

-0.08

Correlation Coefficient

Montana Technologies  Aptiv PLC

Good diversification

The 3 months correlation between Montana and Aptiv is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Montana Technologies and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and Montana 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 Montana Technologies are associated (or correlated) with Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Montana Technologies i.e., Montana Technologies and Aptiv PLC go up and down completely randomly.

Pair Corralation between Montana Technologies and Aptiv PLC

Assuming the 90 days horizon Montana Technologies is expected to under-perform the Aptiv PLC. In addition to that, Montana Technologies is 7.82 times more volatile than Aptiv PLC. It trades about 0.0 of its total potential returns per unit of risk. Aptiv PLC is currently generating about 0.24 per unit of volatility. If you would invest  6,007  in Aptiv PLC on October 26, 2024 and sell it today you would earn a total of  324.00  from holding Aptiv PLC or generate 5.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Montana Technologies  vs.  Aptiv PLC

Montana Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Montana Technologies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking indicators, Montana Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Aptiv PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Montana Technologies and Aptiv PLC

The main advantage of trading using opposite Montana Technologies and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montana Technologies position performs unexpectedly, Aptiv 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.

The idea behind Montana Technologies and Aptiv PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..