Correlation Between Aptiv PLC and Dorman Products
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC 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 Aptiv PLC and Dorman Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Dorman Products, you can compare the effects of market volatilities on Aptiv PLC 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 Aptiv PLC with a short position of Dorman Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Dorman Products.
Diversification Opportunities for Aptiv PLC and Dorman Products
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aptiv and Dorman is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Dorman Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorman Products 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 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 Aptiv PLC i.e., Aptiv PLC and Dorman Products go up and down completely randomly.
Pair Corralation between Aptiv PLC and Dorman Products
Given the investment horizon of 90 days Aptiv PLC is expected to under-perform the Dorman Products. In addition to that, Aptiv PLC is 1.32 times more volatile than Dorman Products. It trades about -0.2 of its total potential returns per unit of risk. Dorman Products is currently generating about -0.1 per unit of volatility. If you would invest 9,353 in Dorman Products on January 25, 2024 and sell it today you would lose (372.00) from holding Dorman Products or give up 3.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. Dorman Products
Performance |
| Timeline |
| Aptiv PLC |
| Dorman Products |
Aptiv PLC and Dorman Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Dorman Products
The main advantage of trading using opposite Aptiv PLC and Dorman Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC 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.The idea behind Aptiv PLC and Dorman Products 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.| Dorman Products vs. Fox Factory Holding | Dorman Products vs. Douglas Dynamics | Dorman Products 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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