Correlation Between Aptiv PLC and Independence Contract

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

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

Diversification Opportunities for Aptiv PLC and Independence Contract

0.28

Correlation Coefficient

Aptiv PLC  Independence Contract

Modest diversification

The 3 months correlation between Aptiv and Independence is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Independence Contract Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Contract and Aptiv PLC 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 Aptiv PLC are associated (or correlated) with Independence Contract. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Contract has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Independence Contract go up and down completely randomly.

Pair Corralation between Aptiv PLC and Independence Contract

Given the investment horizon of 90 days Aptiv PLC is expected to generate 0.47 times more return on investment than Independence Contract. However, Aptiv PLC is 2.13 times less risky than Independence Contract. It trades about -0.04 of its potential returns per unit of risk. Independence Contract Drilling, is currently generating about -0.11 per unit of risk. If you would invest  10,408  in Aptiv PLC on October 11, 2024 and sell it today you would lose (4,328) from holding Aptiv PLC or give up 41.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.03%
Values	Daily Returns

Aptiv PLC  vs.  Independence Contract Drilling

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Independence Contract

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Independence Contract Drilling, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Independence Contract is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Aptiv PLC and Independence Contract

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

The idea behind Aptiv PLC and Independence Contract Drilling, 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.