Correlation Between Service Team and Dana

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

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

Diversification Opportunities for Service Team and Dana

0.0

Correlation Coefficient

Service Team  Dana

Pay attention - limited upside

The 3 months correlation between Service and Dana is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Service Team and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and Service Team 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 Service Team are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Service Team i.e., Service Team and Dana go up and down completely randomly.

Pair Corralation between Service Team and Dana

Given the investment horizon of 90 days Service Team is expected to under-perform the Dana. In addition to that, Service Team is 3.0 times more volatile than Dana Inc. It trades about -0.13 of its total potential returns per unit of risk. Dana Inc is currently generating about 0.11 per unit of volatility. If you would invest  985.00  in Dana Inc on September 14, 2024 and sell it today you would earn a total of  267.00  from holding Dana Inc or generate 27.11% return on investment over 90 days.

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

Service Team  vs.  Dana Inc

Service Team

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Service Team has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Dana Inc

Risk-Adjusted Performance

8 of 100

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 fragile basic indicators, Dana displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Service Team and Dana

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

The idea behind Service Team and Dana Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.