Correlation Between Miller Industries and BorgWarner
Can any of the company-specific risk be diversified away by investing in both Miller Industries and BorgWarner 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 Miller Industries and BorgWarner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miller Industries and BorgWarner, you can compare the effects of market volatilities on Miller Industries and BorgWarner 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 Miller Industries with a short position of BorgWarner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Industries and BorgWarner.
Diversification Opportunities for Miller Industries and BorgWarner
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Miller and BorgWarner is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Miller Industries and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner and Miller Industries 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 Miller Industries are associated (or correlated) with BorgWarner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BorgWarner has no effect on the direction of Miller Industries i.e., Miller Industries and BorgWarner go up and down completely randomly.
Pair Corralation between Miller Industries and BorgWarner
Considering the 90-day investment horizon Miller Industries is expected to generate 1.28 times more return on investment than BorgWarner. However, Miller Industries is 1.28 times more volatile than BorgWarner. It trades about 0.16 of its potential returns per unit of risk. BorgWarner is currently generating about 0.0 per unit of risk. If you would invest 4,005 in Miller Industries on January 21, 2024 and sell it today you would earn a total of 914.00 from holding Miller Industries or generate 22.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Miller Industries vs. BorgWarner
Performance |
| Timeline |
| Miller Industries |
| BorgWarner |
Miller Industries and BorgWarner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miller Industries and BorgWarner
The main advantage of trading using opposite Miller Industries and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Industries position performs unexpectedly, BorgWarner 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 BorgWarner will offset losses from the drop in BorgWarner's long position.| Miller Industries vs. Dorman Products | Miller Industries vs. Standard Motor Products | Miller Industries vs. Motorcar Parts of | Miller Industries vs. Douglas Dynamics |
| BorgWarner vs. Lear Corporation | BorgWarner vs. Autoliv | BorgWarner vs. Fox Factory Holding | BorgWarner vs. LKQ Corporation |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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