Correlation Between Stoneridge and Dana

Can any of the company-specific risk be diversified away by investing in both Stoneridge and Dana 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 Stoneridge and Dana into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stoneridge and Dana Inc, you can compare the effects of market volatilities on Stoneridge and Dana 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 Stoneridge with a short position of Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stoneridge and Dana.

Diversification Opportunities for Stoneridge and Dana

0.23

Correlation Coefficient

Stoneridge  Dana

Modest diversification

The 3 months correlation between Stoneridge and Dana is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Stoneridge and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and Stoneridge 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 Stoneridge are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Stoneridge i.e., Stoneridge and Dana go up and down completely randomly.

Pair Corralation between Stoneridge and Dana

Considering the 90-day investment horizon Stoneridge is expected to under-perform the Dana. In addition to that, Stoneridge is 1.1 times more volatile than Dana Inc. It trades about -0.1 of its total potential returns per unit of risk. Dana Inc is currently generating about 0.0 per unit of volatility. If you would invest  1,364  in Dana Inc on February 11, 2024 and sell it today you would lose (21.00) from holding Dana Inc or give up 1.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Stoneridge  vs.  Dana Inc

Stoneridge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stoneridge has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Dana Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dana Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dana is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Stoneridge and Dana

The main advantage of trading using opposite Stoneridge and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoneridge position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana's long position.

The idea behind Stoneridge and Dana Inc 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.