Correlation Between Nio and Stellantis

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

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

Diversification Opportunities for Nio and Stellantis

-0.05

Correlation Coefficient

Nio  Stellantis

Good diversification

The 3 months correlation between Nio and Stellantis is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Stellantis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellantis NV and Nio 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 Nio Class A are associated (or correlated) with Stellantis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellantis NV has no effect on the direction of Nio i.e., Nio and Stellantis go up and down completely randomly.

Pair Corralation between Nio and Stellantis

Considering the 90-day investment horizon Nio Class A is expected to under-perform the Stellantis. In addition to that, Nio is 1.67 times more volatile than Stellantis NV. It trades about -0.04 of its total potential returns per unit of risk. Stellantis NV is currently generating about -0.05 per unit of volatility. If you would invest  1,304  in Stellantis NV on December 29, 2024 and sell it today you would lose (123.00) from holding Stellantis NV or give up 9.43% of portfolio value over 90 days.

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

Nio Class A  vs.  Stellantis NV

Nio Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nio Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Stellantis NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellantis NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Nio and Stellantis

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

The idea behind Nio Class A and Stellantis NV 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.