Correlation Between WE Source and Aptiv PLC

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

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

Diversification Opportunities for WE Source and Aptiv PLC

-0.6

Correlation Coefficient

WE Source  Aptiv PLC

Excellent diversification

The 3 months correlation between WESC and Aptiv is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding WE Source Corp and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and WE Source 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 WE Source Corp 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 WE Source i.e., WE Source and Aptiv PLC go up and down completely randomly.

Pair Corralation between WE Source and Aptiv PLC

Given the investment horizon of 90 days WE Source Corp is expected to under-perform the Aptiv PLC. In addition to that, WE Source is 5.61 times more volatile than Aptiv PLC. It trades about -0.13 of its total potential returns per unit of risk. Aptiv PLC is currently generating about 0.09 per unit of volatility. If you would invest  5,878  in Aptiv PLC on May 4, 2025 and sell it today you would earn a total of  687.00  from holding Aptiv PLC or generate 11.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

WE Source Corp  vs.  Aptiv PLC

WE Source Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days WE Source Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Aptiv PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aptiv PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Aptiv PLC showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WE Source and Aptiv PLC

The main advantage of trading using opposite WE Source and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WE Source 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.

The idea behind WE Source Corp and Aptiv PLC 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.