Correlation Between BorgWarner and Cineverse Corp

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

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

Diversification Opportunities for BorgWarner and Cineverse Corp

-0.46

Correlation Coefficient

BorgWarner  Cineverse Corp

Very good diversification

The 3 months correlation between BorgWarner and Cineverse is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Cineverse Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cineverse Corp 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 Cineverse Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cineverse Corp has no effect on the direction of BorgWarner i.e., BorgWarner and Cineverse Corp go up and down completely randomly.

Pair Corralation between BorgWarner and Cineverse Corp

Considering the 90-day investment horizon BorgWarner is expected to under-perform the Cineverse Corp. But the stock apears to be less risky and, when comparing its historical volatility, BorgWarner is 4.88 times less risky than Cineverse Corp. The stock trades about -0.06 of its potential returns per unit of risk. The Cineverse Corp is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Cineverse Corp on September 23, 2024 and sell it today you would earn a total of  272.00  from holding Cineverse Corp or generate 340.0% 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.  Cineverse Corp

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 somewhat strong basic indicators, BorgWarner is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cineverse Corp

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cineverse Corp are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Cineverse Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BorgWarner and Cineverse Corp

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

The idea behind BorgWarner and Cineverse Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.