Correlation Between BorgWarner and Thor Industries
Can any of the company-specific risk be diversified away by investing in both BorgWarner and Thor Industries 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 Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BorgWarner and Thor Industries, you can compare the effects of market volatilities on BorgWarner and Thor Industries 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 Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and Thor Industries.
Diversification Opportunities for BorgWarner and Thor Industries
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BorgWarner and Thor is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of BorgWarner i.e., BorgWarner and Thor Industries go up and down completely randomly.
Pair Corralation between BorgWarner and Thor Industries
Considering the 90-day investment horizon BorgWarner is expected to generate 0.7 times more return on investment than Thor Industries. However, BorgWarner is 1.43 times less risky than Thor Industries. It trades about 0.04 of its potential returns per unit of risk. Thor Industries is currently generating about -0.05 per unit of risk. If you would invest 3,207 in BorgWarner on January 18, 2024 and sell it today you would earn a total of 37.00 from holding BorgWarner or generate 1.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BorgWarner vs. Thor Industries
Performance |
Timeline |
BorgWarner |
Thor Industries |
BorgWarner and Thor Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BorgWarner and Thor Industries
The main advantage of trading using opposite BorgWarner and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner position performs unexpectedly, Thor Industries 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 Thor Industries will offset losses from the drop in Thor Industries' long position.BorgWarner vs. Mullen Automotive | BorgWarner vs. Canoo Inc | BorgWarner vs. Faraday Future Intelligent | BorgWarner vs. GreenPower Motor |
Thor Industries vs. Hycroft Mining Holding | Thor Industries vs. Exela Technologies | Thor Industries vs. Aquagold International | Thor Industries vs. Thrivent High Yield |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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