Correlation Between BorgWarner and AYRO

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

By analyzing existing cross correlation between BorgWarner and AYRO Inc, you can compare the effects of market volatilities on BorgWarner and AYRO 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 AYRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and AYRO.

Diversification Opportunities for BorgWarner and AYRO

-0.62

Correlation Coefficient

BorgWarner  AYRO

Excellent diversification

The 3 months correlation between BorgWarner and AYRO is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and AYRO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AYRO Inc 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 AYRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AYRO Inc has no effect on the direction of BorgWarner i.e., BorgWarner and AYRO go up and down completely randomly.

Pair Corralation between BorgWarner and AYRO

Considering the 90-day investment horizon BorgWarner is expected to generate 0.35 times more return on investment than AYRO. However, BorgWarner is 2.89 times less risky than AYRO. It trades about -0.26 of its potential returns per unit of risk. AYRO Inc is currently generating about -0.36 per unit of risk. If you would invest  3,738  in BorgWarner on March 11, 2024 and sell it today you would lose (277.00) from holding BorgWarner or give up 7.41% of portfolio value over 90 days.

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

BorgWarner  vs.  AYRO Inc

BorgWarner

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BorgWarner are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, BorgWarner may actually be approaching a critical reversion point that can send shares even higher in July 2024.

AYRO Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AYRO Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BorgWarner and AYRO

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

The idea behind BorgWarner and AYRO 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.