Correlation Between Aptiv PLC and Ziff Davis

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

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

Diversification Opportunities for Aptiv PLC and Ziff Davis

-0.73

Correlation Coefficient

Aptiv PLC  Ziff Davis

Pay attention - limited upside

The 3 months correlation between Aptiv and Ziff is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Ziff Davis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ziff Davis 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 Ziff Davis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ziff Davis has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Ziff Davis go up and down completely randomly.

Pair Corralation between Aptiv PLC and Ziff Davis

Given the investment horizon of 90 days Aptiv PLC is expected to under-perform the Ziff Davis. In addition to that, Aptiv PLC is 1.07 times more volatile than Ziff Davis. It trades about -0.03 of its total potential returns per unit of risk. Ziff Davis is currently generating about -0.02 per unit of volatility. If you would invest  7,910  in Ziff Davis on September 20, 2024 and sell it today you would lose (2,092) from holding Ziff Davis or give up 26.45% of portfolio value over 90 days.

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

Aptiv PLC  vs.  Ziff Davis

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

Ziff Davis

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ziff Davis are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ziff Davis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptiv PLC and Ziff Davis

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

The idea behind Aptiv PLC and Ziff Davis 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.