Correlation Between GreenPower and Aptiv PLC
Can any of the company-specific risk be diversified away by investing in both GreenPower and Aptiv PLC 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 GreenPower and Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenPower Motor and Aptiv PLC, you can compare the effects of market volatilities on GreenPower and Aptiv PLC 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 GreenPower with a short position of Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenPower and Aptiv PLC.
Diversification Opportunities for GreenPower and Aptiv PLC
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GreenPower and Aptiv is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and GreenPower 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 GreenPower Motor are associated (or correlated) with Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of GreenPower i.e., GreenPower and Aptiv PLC go up and down completely randomly.
Pair Corralation between GreenPower and Aptiv PLC
Allowing for the 90-day total investment horizon GreenPower Motor is expected to generate 1.56 times more return on investment than Aptiv PLC. However, GreenPower is 1.56 times more volatile than Aptiv PLC. It trades about -0.03 of its potential returns per unit of risk. Aptiv PLC is currently generating about -0.22 per unit of risk. If you would invest 192.00 in GreenPower Motor on January 31, 2024 and sell it today you would lose (6.00) from holding GreenPower Motor or give up 3.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
GreenPower Motor vs. Aptiv PLC
Performance |
Timeline |
GreenPower Motor |
Aptiv PLC |
GreenPower and Aptiv PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GreenPower and Aptiv PLC
The main advantage of trading using opposite GreenPower and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower position performs unexpectedly, Aptiv PLC 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.GreenPower vs. AGCO Corporation | GreenPower vs. CNH Industrial NV | GreenPower vs. Deere Company | GreenPower vs. Lindsay |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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