Correlation Between Aptiv PLC and VOXX International

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

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

Diversification Opportunities for Aptiv PLC and VOXX International

-0.36

Correlation Coefficient

Aptiv PLC  VOXX International

Very good diversification

The 3 months correlation between Aptiv and VOXX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and VOXX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOXX International 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 VOXX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOXX International has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and VOXX International go up and down completely randomly.

Pair Corralation between Aptiv PLC and VOXX International

Assuming the 90 days horizon Aptiv PLC is expected to generate 2.99 times less return on investment than VOXX International. But when comparing it to its historical volatility, Aptiv PLC is 2.24 times less risky than VOXX International. It trades about 0.05 of its potential returns per unit of risk. VOXX International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  710.00  in VOXX International on September 27, 2024 and sell it today you would earn a total of  20.00  from holding VOXX International or generate 2.82% return on investment over 90 days.

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

Aptiv PLC  vs.  VOXX International

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

VOXX International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VOXX International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VOXX International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptiv PLC and VOXX International

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

The idea behind Aptiv PLC and VOXX International 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.