Correlation Between Aptiv PLC and LiveWire

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

Diversification Opportunities for Aptiv PLC and LiveWire

AptivLiveWireDiversified AwayAptivLiveWireDiversified Away100%
-0.92
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Aptiv and LiveWire is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and LiveWire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveWire Group 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 LiveWire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveWire Group has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and LiveWire go up and down completely randomly.

Pair Corralation between Aptiv PLC and LiveWire

Given the investment horizon of 90 days Aptiv PLC is expected to generate 0.36 times more return on investment than LiveWire. However, Aptiv PLC is 2.77 times less risky than LiveWire. It trades about 0.25 of its potential returns per unit of risk. LiveWire Group is currently generating about -0.41 per unit of risk. If you would invest  5,438  in Aptiv PLC on November 22, 2024 and sell it today you would earn a total of  1,228  from holding Aptiv PLC or generate 22.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Aptiv PLC  vs.  LiveWire Group

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -60-40-200
JavaScript chart by amCharts 3.21.15APTV LVWR
       Timeline  
Aptiv PLC 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Aptiv PLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Aptiv PLC showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb525456586062646668
LiveWire Group 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days LiveWire Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.533.544.555.566.5

Aptiv PLC and LiveWire Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.61-3.45-2.3-1.140.01.242.513.775.04 0.050.100.15
JavaScript chart by amCharts 3.21.15APTV LVWR
       Returns  

Pair Trading with Aptiv PLC and LiveWire

The main advantage of trading using opposite Aptiv PLC and LiveWire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, LiveWire 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 LiveWire will offset losses from the drop in LiveWire's long position.
The idea behind Aptiv PLC and LiveWire Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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