Correlation Between NWTN and Dana

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

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

Diversification Opportunities for NWTN and Dana

-0.6

Correlation Coefficient

NWTN  Dana

Excellent diversification

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

Pair Corralation between NWTN and Dana

Given the investment horizon of 90 days NWTN Class B is expected to generate 3.15 times more return on investment than Dana. However, NWTN is 3.15 times more volatile than Dana Inc. It trades about 0.07 of its potential returns per unit of risk. Dana Inc is currently generating about -0.01 per unit of risk. If you would invest  105.00  in NWTN Class B on September 3, 2024 and sell it today you would earn a total of  15.00  from holding NWTN Class B or generate 14.29% return on investment over 90 days.

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

NWTN Class B  vs.  Dana Inc

NWTN Class B

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NWTN Class B are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, NWTN displayed 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 NWTN and Dana

The main advantage of trading using opposite NWTN and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NWTN 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 NWTN Class B 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 CEOs Directory module to screen CEOs from public companies around the world.