Correlation Between U Haul and BorgWarner

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

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

Diversification Opportunities for U Haul and BorgWarner

0.23

Correlation Coefficient

U Haul  BorgWarner

Modest diversification

The 3 months correlation between UHAL and BorgWarner is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding U Haul Holding and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and U Haul 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 U Haul 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 U Haul i.e., U Haul and BorgWarner go up and down completely randomly.

Pair Corralation between U Haul and BorgWarner

Given the investment horizon of 90 days U Haul Holding is expected to generate 0.82 times more return on investment than BorgWarner. However, U Haul Holding is 1.22 times less risky than BorgWarner. It trades about 0.01 of its potential returns per unit of risk. BorgWarner is currently generating about -0.07 per unit of risk. If you would invest  6,901  in U Haul Holding on December 2, 2024 and sell it today you would earn a total of  24.00  from holding U Haul Holding or generate 0.35% return on investment over 90 days.

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

U Haul Holding  vs.  BorgWarner

U Haul Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days U Haul Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, U Haul is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

BorgWarner

Risk-Adjusted Performance

Very Weak

Over the last 90 days BorgWarner has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with U Haul and BorgWarner

The main advantage of trading using opposite U Haul and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Haul 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 U Haul Holding 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.