Correlation Between Natures Miracle and BorgWarner
Can any of the company-specific risk be diversified away by investing in both Natures Miracle 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 Natures Miracle and BorgWarner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natures Miracle Holding and BorgWarner, you can compare the effects of market volatilities on Natures Miracle 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 Natures Miracle with a short position of BorgWarner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natures Miracle and BorgWarner.
Diversification Opportunities for Natures Miracle and BorgWarner
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Natures and BorgWarner is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Natures Miracle Holding and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and Natures Miracle 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 Natures Miracle Holding 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 Natures Miracle i.e., Natures Miracle and BorgWarner go up and down completely randomly.
Pair Corralation between Natures Miracle and BorgWarner
Given the investment horizon of 90 days Natures Miracle Holding is expected to under-perform the BorgWarner. In addition to that, Natures Miracle is 4.11 times more volatile than BorgWarner. It trades about -0.09 of its total potential returns per unit of risk. BorgWarner is currently generating about -0.01 per unit of volatility. If you would invest 3,805 in BorgWarner on October 11, 2024 and sell it today you would lose (651.00) from holding BorgWarner or give up 17.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Natures Miracle Holding vs. BorgWarner
Performance |
Timeline |
Natures Miracle Holding |
BorgWarner |
Natures Miracle and BorgWarner Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Natures Miracle and BorgWarner
The main advantage of trading using opposite Natures Miracle and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natures Miracle 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.Natures Miracle vs. BorgWarner | Natures Miracle vs. Delek Logistics Partners | Natures Miracle vs. Proficient Auto Logistics, | Natures Miracle vs. FDG Electric Vehicles |
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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.
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