Correlation Between Superior Industries and Dana

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

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

Diversification Opportunities for Superior Industries and Dana

0.22

Correlation Coefficient

Superior Industries  Dana

Modest diversification

The 3 months correlation between Superior and Dana is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Superior Industries Internatio and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and Superior 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 Superior Industries International 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 Superior Industries i.e., Superior Industries and Dana go up and down completely randomly.

Pair Corralation between Superior Industries and Dana

Considering the 90-day investment horizon Superior Industries International is expected to under-perform the Dana. In addition to that, Superior Industries is 2.3 times more volatile than Dana Inc. It trades about -0.04 of its total potential returns per unit of risk. Dana Inc is currently generating about 0.21 per unit of volatility. If you would invest  1,235  in Dana Inc on February 11, 2024 and sell it today you would earn a total of  108.00  from holding Dana Inc or generate 8.74% return on investment over 90 days.

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

Superior Industries Internatio  vs.  Dana Inc

Superior Industries

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Industries International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Superior Industries reported solid returns over the last few months and may actually be approaching a breakup point.

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 Superior Industries and Dana

The main advantage of trading using opposite Superior Industries and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Industries 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 Superior Industries International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.