Correlation Between BorgWarner and Coty

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

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

Diversification Opportunities for BorgWarner and Coty

-0.03

Correlation Coefficient

BorgWarner  Coty

Good diversification

The 3 months correlation between BorgWarner and Coty is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc and BorgWarner 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 BorgWarner are associated (or correlated) with Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of BorgWarner i.e., BorgWarner and Coty go up and down completely randomly.

Pair Corralation between BorgWarner and Coty

Considering the 90-day investment horizon BorgWarner is expected to generate 0.65 times more return on investment than Coty. However, BorgWarner is 1.53 times less risky than Coty. It trades about 0.23 of its potential returns per unit of risk. Coty Inc is currently generating about 0.04 per unit of risk. If you would invest  3,018  in BorgWarner on May 7, 2025 and sell it today you would earn a total of  810.00  from holding BorgWarner or generate 26.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BorgWarner  vs.  Coty Inc

BorgWarner

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BorgWarner are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BorgWarner sustained solid returns over the last few months and may actually be approaching a breakup point.

Coty Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coty Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Coty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BorgWarner and Coty

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

The idea behind BorgWarner and Coty 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.