Correlation Between BorgWarner and Jutal Offshore

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

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

Diversification Opportunities for BorgWarner and Jutal Offshore

0.64

Correlation Coefficient

BorgWarner  Jutal Offshore

Poor diversification

The 3 months correlation between BorgWarner and Jutal is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Jutal Offshore Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jutal Offshore Oil 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 Jutal Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jutal Offshore Oil has no effect on the direction of BorgWarner i.e., BorgWarner and Jutal Offshore go up and down completely randomly.

Pair Corralation between BorgWarner and Jutal Offshore

Considering the 90-day investment horizon BorgWarner is expected to generate 4.68 times less return on investment than Jutal Offshore. But when comparing it to its historical volatility, BorgWarner is 1.41 times less risky than Jutal Offshore. It trades about 0.04 of its potential returns per unit of risk. Jutal Offshore Oil is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,560  in Jutal Offshore Oil on September 4, 2024 and sell it today you would earn a total of  350.00  from holding Jutal Offshore Oil or generate 22.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

BorgWarner  vs.  Jutal Offshore Oil

BorgWarner

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BorgWarner are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Jutal Offshore Oil

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jutal Offshore Oil are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Jutal Offshore showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BorgWarner and Jutal Offshore

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

The idea behind BorgWarner and Jutal Offshore Oil 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.