Correlation Between Getty Realty and BorgWarner

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

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

Diversification Opportunities for Getty Realty and BorgWarner

-0.12

Correlation Coefficient

Getty Realty  BorgWarner

Good diversification

The 3 months correlation between Getty and BorgWarner is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Getty Realty and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and Getty Realty 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 Getty Realty are associated (or correlated) with BorgWarner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BorgWarner has no effect on the direction of Getty Realty i.e., Getty Realty and BorgWarner go up and down completely randomly.

Pair Corralation between Getty Realty and BorgWarner

Considering the 90-day investment horizon Getty Realty is expected to generate 6.97 times less return on investment than BorgWarner. But when comparing it to its historical volatility, Getty Realty is 1.91 times less risky than BorgWarner. It trades about 0.02 of its potential returns per unit of risk. BorgWarner is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,211  in BorgWarner on September 13, 2024 and sell it today you would earn a total of  298.00  from holding BorgWarner or generate 9.28% return on investment over 90 days.

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

Getty Realty  vs.  BorgWarner

Getty Realty

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Getty Realty are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Getty Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BorgWarner

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BorgWarner are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BorgWarner may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Getty Realty and BorgWarner

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

The idea behind Getty Realty and BorgWarner 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.