Correlation Between CleanCore Solutions and BorgWarner

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

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

Diversification Opportunities for CleanCore Solutions and BorgWarner

0.39

Correlation Coefficient

CleanCore Solutions  BorgWarner

Weak diversification

The 3 months correlation between CleanCore and BorgWarner is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CleanCore Solutions and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and CleanCore Solutions 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 CleanCore Solutions 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 CleanCore Solutions i.e., CleanCore Solutions and BorgWarner go up and down completely randomly.

Pair Corralation between CleanCore Solutions and BorgWarner

Given the investment horizon of 90 days CleanCore Solutions is expected to under-perform the BorgWarner. In addition to that, CleanCore Solutions is 3.35 times more volatile than BorgWarner. It trades about -0.06 of its total potential returns per unit of risk. BorgWarner is currently generating about -0.01 per unit of volatility. If you would invest  3,745  in BorgWarner on October 10, 2024 and sell it today you would lose (518.00) from holding BorgWarner or give up 13.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	35.56%
Values	Daily Returns

CleanCore Solutions  vs.  BorgWarner

CleanCore Solutions

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CleanCore Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, CleanCore Solutions exhibited solid returns over the last few months and may actually be approaching a breakup point.

BorgWarner

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BorgWarner has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CleanCore Solutions and BorgWarner

The main advantage of trading using opposite CleanCore Solutions and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanCore Solutions 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 CleanCore Solutions 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.