Correlation Between Aptiv PLC and Cooper Stnd
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and Cooper Stnd 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 Aptiv PLC and Cooper Stnd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Cooper Stnd, you can compare the effects of market volatilities on Aptiv PLC and Cooper Stnd 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 Aptiv PLC with a short position of Cooper Stnd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Cooper Stnd.
Diversification Opportunities for Aptiv PLC and Cooper Stnd
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aptiv and Cooper is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Cooper Stnd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Stnd and Aptiv PLC 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 Aptiv PLC are associated (or correlated) with Cooper Stnd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Stnd has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Cooper Stnd go up and down completely randomly.
Pair Corralation between Aptiv PLC and Cooper Stnd
Given the investment horizon of 90 days Aptiv PLC is expected to under-perform the Cooper Stnd. But the stock apears to be less risky and, when comparing its historical volatility, Aptiv PLC is 2.07 times less risky than Cooper Stnd. The stock trades about -0.24 of its potential returns per unit of risk. The Cooper Stnd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,533 in Cooper Stnd on January 25, 2024 and sell it today you would earn a total of 9.00 from holding Cooper Stnd or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. Cooper Stnd
Performance |
| Timeline |
| Aptiv PLC |
| Cooper Stnd |
Aptiv PLC and Cooper Stnd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Cooper Stnd
The main advantage of trading using opposite Aptiv PLC and Cooper Stnd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, Cooper Stnd 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 Cooper Stnd will offset losses from the drop in Cooper Stnd's long position.The idea behind Aptiv PLC and Cooper Stnd 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.| Cooper Stnd vs. Fox Factory Holding | Cooper Stnd vs. Douglas Dynamics | Cooper Stnd vs. Monro Muffler Brake |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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