Correlation Between BorgWarner and Sypris Solutions

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

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

Diversification Opportunities for BorgWarner and Sypris Solutions

0.04

Correlation Coefficient

BorgWarner  Sypris Solutions

Significant diversification

The 3 months correlation between BorgWarner and Sypris is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Sypris Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sypris Solutions 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 Sypris Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sypris Solutions has no effect on the direction of BorgWarner i.e., BorgWarner and Sypris Solutions go up and down completely randomly.

Pair Corralation between BorgWarner and Sypris Solutions

Considering the 90-day investment horizon BorgWarner is expected to generate 0.71 times more return on investment than Sypris Solutions. However, BorgWarner is 1.42 times less risky than Sypris Solutions. It trades about 0.1 of its potential returns per unit of risk. Sypris Solutions is currently generating about -0.01 per unit of risk. If you would invest  3,188  in BorgWarner on September 12, 2024 and sell it today you would earn a total of  322.00  from holding BorgWarner or generate 10.1% return on investment over 90 days.

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

BorgWarner  vs.  Sypris Solutions

BorgWarner

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BorgWarner are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, BorgWarner may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sypris Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sypris Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Sypris Solutions is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BorgWarner and Sypris Solutions

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

The idea behind BorgWarner and Sypris Solutions 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.