Correlation Between BorgWarner and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both BorgWarner and Johnson Controls 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 BorgWarner and Johnson Controls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BorgWarner and Johnson Controls International, you can compare the effects of market volatilities on BorgWarner and Johnson Controls 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 BorgWarner with a short position of Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and Johnson Controls.
Diversification Opportunities for BorgWarner and Johnson Controls
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BorgWarner and Johnson is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int and BorgWarner 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 BorgWarner are associated (or correlated) with Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of BorgWarner i.e., BorgWarner and Johnson Controls go up and down completely randomly.
Pair Corralation between BorgWarner and Johnson Controls
Considering the 90-day investment horizon BorgWarner is expected to generate 3.53 times less return on investment than Johnson Controls. In addition to that, BorgWarner is 1.79 times more volatile than Johnson Controls International. It trades about 0.01 of its total potential returns per unit of risk. Johnson Controls International is currently generating about 0.05 per unit of volatility. If you would invest 6,410 in Johnson Controls International on January 26, 2024 and sell it today you would earn a total of 51.00 from holding Johnson Controls International or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
BorgWarner vs. Johnson Controls International
Performance |
| Timeline |
| BorgWarner |
| Johnson Controls Int |
BorgWarner and Johnson Controls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BorgWarner and Johnson Controls
The main advantage of trading using opposite BorgWarner and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner position performs unexpectedly, Johnson Controls 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 Johnson Controls will offset losses from the drop in Johnson Controls' long position.| BorgWarner vs. Faraday Future Intelligent | BorgWarner vs. Mullen Automotive | BorgWarner vs. Xpeng Inc | BorgWarner vs. Nio Class A |
| Johnson Controls vs. Trex Company | Johnson Controls vs. Quanex Building Products | Johnson Controls vs. Gibraltar Industries | Johnson Controls vs. Travis Perkins plc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |