Correlation Between BorgWarner and 855244AK5

Can any of the company-specific risk be diversified away by investing in both BorgWarner and 855244AK5 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 BorgWarner and 855244AK5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BorgWarner and STARBUCKS P 245, you can compare the effects of market volatilities on BorgWarner and 855244AK5 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 BorgWarner with a short position of 855244AK5. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and 855244AK5.

Diversification Opportunities for BorgWarner and 855244AK5

-0.18

Correlation Coefficient

BorgWarner  855244AK5

Good diversification

The 3 months correlation between BorgWarner and 855244AK5 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and STARBUCKS P 245 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STARBUCKS P 245 and BorgWarner 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 BorgWarner are associated (or correlated) with 855244AK5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STARBUCKS P 245 has no effect on the direction of BorgWarner i.e., BorgWarner and 855244AK5 go up and down completely randomly.

Pair Corralation between BorgWarner and 855244AK5

Considering the 90-day investment horizon BorgWarner is expected to under-perform the 855244AK5. In addition to that, BorgWarner is 3.72 times more volatile than STARBUCKS P 245. It trades about -0.2 of its total potential returns per unit of risk. STARBUCKS P 245 is currently generating about -0.09 per unit of volatility. If you would invest  9,708  in STARBUCKS P 245 on December 4, 2024 and sell it today you would lose (245.00) from holding STARBUCKS P 245 or give up 2.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

BorgWarner  vs.  STARBUCKS P 245

BorgWarner

Risk-Adjusted Performance

Very Weak

Over the last 90 days BorgWarner has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

STARBUCKS P 245

Risk-Adjusted Performance

Very Weak

Over the last 90 days STARBUCKS P 245 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 855244AK5 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BorgWarner and 855244AK5

The main advantage of trading using opposite BorgWarner and 855244AK5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner position performs unexpectedly, 855244AK5 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 855244AK5 will offset losses from the drop in 855244AK5's long position.

The idea behind BorgWarner and STARBUCKS P 245 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.