Correlation Between Dana and Standard

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

By analyzing existing cross correlation between Dana Inc and Standard Motor Products, you can compare the effects of market volatilities on Dana and Standard 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 Dana with a short position of Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and Standard.

Diversification Opportunities for Dana and Standard

0.01

Correlation Coefficient

Dana  Standard

Significant diversification

The 3 months correlation between Dana and Standard is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and Standard Motor Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Motor Products and Dana 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 Dana Inc are associated (or correlated) with Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Motor Products has no effect on the direction of Dana i.e., Dana and Standard go up and down completely randomly.

Pair Corralation between Dana and Standard

Considering the 90-day investment horizon Dana Inc is expected to generate 2.14 times more return on investment than Standard. However, Dana is 2.14 times more volatile than Standard Motor Products. It trades about 0.11 of its potential returns per unit of risk. Standard Motor Products is currently generating about -0.18 per unit of risk. If you would invest  1,139  in Dana Inc on December 28, 2024 and sell it today you would earn a total of  236.00  from holding Dana Inc or generate 20.72% return on investment over 90 days.

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

Dana Inc  vs.  Standard Motor Products

Dana Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dana displayed solid returns over the last few months and may actually be approaching a breakup point.

Standard Motor Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Standard Motor Products 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 primary indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Dana and Standard

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

The idea behind Dana Inc and Standard Motor Products 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.