Correlation Between Autoliv and Dorman Products
Can any of the company-specific risk be diversified away by investing in both Autoliv and Dorman Products 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 Dorman Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autoliv and Dorman Products, you can compare the effects of market volatilities on Autoliv and Dorman Products 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 Dorman Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and Dorman Products.
Diversification Opportunities for Autoliv and Dorman Products
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Autoliv and Dorman is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Dorman Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorman Products 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 Dorman Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorman Products has no effect on the direction of Autoliv i.e., Autoliv and Dorman Products go up and down completely randomly.
Pair Corralation between Autoliv and Dorman Products
Considering the 90-day investment horizon Autoliv is expected to generate 0.5 times more return on investment than Dorman Products. However, Autoliv is 2.0 times less risky than Dorman Products. It trades about 0.15 of its potential returns per unit of risk. Dorman Products is currently generating about 0.06 per unit of risk. If you would invest 10,282 in Autoliv on January 18, 2024 and sell it today you would earn a total of 1,287 from holding Autoliv or generate 12.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autoliv vs. Dorman Products
Performance |
| Timeline |
| Autoliv |
| Dorman Products |
Autoliv and Dorman Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autoliv and Dorman Products
The main advantage of trading using opposite Autoliv and Dorman Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv position performs unexpectedly, Dorman Products 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 Dorman Products will offset losses from the drop in Dorman Products' long position.| Autoliv vs. Hyliion Holdings Corp | Autoliv vs. Foresight Autonomous Holdings | Autoliv vs. Aeva Technologies | Autoliv vs. Aeye Inc |
| Dorman Products vs. Hyliion Holdings Corp | Dorman Products vs. Foresight Autonomous Holdings | Dorman Products vs. Aeva Technologies | Dorman Products 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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