Correlation Between BorgWarner and Hafnia
Can any of the company-specific risk be diversified away by investing in both BorgWarner and Hafnia 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 Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BorgWarner and Hafnia Limited, you can compare the effects of market volatilities on BorgWarner and Hafnia 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 Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and Hafnia.
Diversification Opportunities for BorgWarner and Hafnia
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BorgWarner and Hafnia is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited 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 Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of BorgWarner i.e., BorgWarner and Hafnia go up and down completely randomly.
Pair Corralation between BorgWarner and Hafnia
Considering the 90-day investment horizon BorgWarner is expected to generate 0.76 times more return on investment than Hafnia. However, BorgWarner is 1.32 times less risky than Hafnia. It trades about -0.05 of its potential returns per unit of risk. Hafnia Limited is currently generating about -0.08 per unit of risk. If you would invest 3,349 in BorgWarner on September 25, 2024 and sell it today you would lose (152.00) from holding BorgWarner or give up 4.54% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 97.62% |
Values | Daily Returns |
BorgWarner vs. Hafnia Limited
Performance |
Timeline |
BorgWarner |
Hafnia Limited |
BorgWarner and Hafnia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BorgWarner and Hafnia
The main advantage of trading using opposite BorgWarner and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner position performs unexpectedly, Hafnia 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 Hafnia will offset losses from the drop in Hafnia's long position.BorgWarner vs. Ford Motor | BorgWarner vs. General Motors | BorgWarner vs. Goodyear Tire Rubber | BorgWarner vs. Li Auto |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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