Correlation Between BorgWarner and XIAO I

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

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

Diversification Opportunities for BorgWarner and XIAO I

0.29

Correlation Coefficient

BorgWarner  XIAO I

Modest diversification

The 3 months correlation between BorgWarner and XIAO is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and XIAO I American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAO I American 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 XIAO I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAO I American has no effect on the direction of BorgWarner i.e., BorgWarner and XIAO I go up and down completely randomly.

Pair Corralation between BorgWarner and XIAO I

Considering the 90-day investment horizon BorgWarner is expected to under-perform the XIAO I. But the stock apears to be less risky and, when comparing its historical volatility, BorgWarner is 4.73 times less risky than XIAO I. The stock trades about -0.08 of its potential returns per unit of risk. The XIAO I American is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  450.00  in XIAO I American on September 24, 2024 and sell it today you would earn a total of  39.00  from holding XIAO I American or generate 8.67% return on investment over 90 days.

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

BorgWarner  vs.  XIAO I American

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 fragile 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.

XIAO I American

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XIAO I American are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, XIAO I demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BorgWarner and XIAO I

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

The idea behind BorgWarner and XIAO I American 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.