Correlation Between Autoliv and Dana
Can any of the company-specific risk be diversified away by investing in both Autoliv and Dana 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 Autoliv and Dana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autoliv and Dana Inc, you can compare the effects of market volatilities on Autoliv and Dana 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 Autoliv with a short position of Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and Dana.
Diversification Opportunities for Autoliv and Dana
Excellent diversification
The 3 months correlation between Autoliv and Dana is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and Autoliv 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 Autoliv are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Autoliv i.e., Autoliv and Dana go up and down completely randomly.
Pair Corralation between Autoliv and Dana
Considering the 90-day investment horizon Autoliv is expected to under-perform the Dana. But the stock apears to be less risky and, when comparing its historical volatility, Autoliv is 1.78 times less risky than Dana. The stock trades about -0.25 of its potential returns per unit of risk. The Dana Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,214 in Dana Inc on January 20, 2024 and sell it today you would lose (13.00) from holding Dana Inc or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autoliv vs. Dana Inc
Performance |
| Timeline |
| Autoliv |
| Dana Inc |
Autoliv and Dana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autoliv and Dana
The main advantage of trading using opposite Autoliv and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana's long position.| Autoliv vs. Microvast Holdings | Autoliv vs. EVgo Equity Warrants | Autoliv vs. Xos Inc | Autoliv vs. AEye Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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