Correlation Between Autoliv and Douglas Dynamics

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Can any of the company-specific risk be diversified away by investing in both Autoliv and Douglas Dynamics 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 Autoliv and Douglas Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autoliv and Douglas Dynamics, you can compare the effects of market volatilities on Autoliv and Douglas Dynamics 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 Autoliv with a short position of Douglas Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and Douglas Dynamics.

Diversification Opportunities for Autoliv and Douglas Dynamics

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Autoliv and Douglas is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Douglas Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Dynamics and Autoliv 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 Autoliv are associated (or correlated) with Douglas Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Dynamics has no effect on the direction of Autoliv i.e., Autoliv and Douglas Dynamics go up and down completely randomly.

Pair Corralation between Autoliv and Douglas Dynamics

Considering the 90-day investment horizon Autoliv is expected to generate 0.86 times more return on investment than Douglas Dynamics. However, Autoliv is 1.16 times less risky than Douglas Dynamics. It trades about 0.0 of its potential returns per unit of risk. Douglas Dynamics is currently generating about 0.0 per unit of risk. If you would invest  9,845  in Autoliv on September 5, 2024 and sell it today you would lose (70.00) from holding Autoliv or give up 0.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Autoliv  vs.  Douglas Dynamics

 Performance 
       Timeline  
Autoliv 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Autoliv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Autoliv is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Douglas Dynamics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Douglas Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Douglas Dynamics is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Autoliv and Douglas Dynamics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Autoliv and Douglas Dynamics

The main advantage of trading using opposite Autoliv and Douglas Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv position performs unexpectedly, Douglas Dynamics 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 Douglas Dynamics will offset losses from the drop in Douglas Dynamics' long position.
The idea behind Autoliv and Douglas Dynamics 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.
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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