Correlation Between 26875PAP6 and Aptiv PLC

Can any of the company-specific risk be diversified away by investing in both 26875PAP6 and Aptiv PLC 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 26875PAP6 and Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EOG RES INC and Aptiv PLC, you can compare the effects of market volatilities on 26875PAP6 and Aptiv PLC 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 26875PAP6 with a short position of Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26875PAP6 and Aptiv PLC.

Diversification Opportunities for 26875PAP6 and Aptiv PLC

0.3

Correlation Coefficient

26875PAP6  Aptiv PLC

Weak diversification

The 3 months correlation between 26875PAP6 and Aptiv is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding EOG RES INC and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and 26875PAP6 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 EOG RES INC are associated (or correlated) with Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of 26875PAP6 i.e., 26875PAP6 and Aptiv PLC go up and down completely randomly.

Pair Corralation between 26875PAP6 and Aptiv PLC

Assuming the 90 days trading horizon EOG RES INC is expected to under-perform the Aptiv PLC. But the bond apears to be less risky and, when comparing its historical volatility, EOG RES INC is 3.54 times less risky than Aptiv PLC. The bond trades about -0.01 of its potential returns per unit of risk. The Aptiv PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,007  in Aptiv PLC on December 25, 2024 and sell it today you would earn a total of  384.00  from holding Aptiv PLC or generate 6.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

EOG RES INC  vs.  Aptiv PLC

EOG RES INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days EOG RES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26875PAP6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aptiv PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aptiv PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Aptiv PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with 26875PAP6 and Aptiv PLC

The main advantage of trading using opposite 26875PAP6 and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26875PAP6 position performs unexpectedly, Aptiv PLC 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.

The idea behind EOG RES INC and Aptiv PLC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.