Correlation Between NWTN and Nio

Can any of the company-specific risk be diversified away by investing in both NWTN and Nio 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 Nio 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 Nio Class A, you can compare the effects of market volatilities on NWTN and Nio 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 Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of NWTN and Nio.

Diversification Opportunities for NWTN and Nio

-0.2

Correlation Coefficient

NWTN  Nio

Good diversification

The 3 months correlation between NWTN and Nio is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NWTN Class B and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A 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 Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of NWTN i.e., NWTN and Nio go up and down completely randomly.

Pair Corralation between NWTN and Nio

Given the investment horizon of 90 days NWTN Class B is expected to under-perform the Nio. In addition to that, NWTN is 2.01 times more volatile than Nio Class A. It trades about -0.12 of its total potential returns per unit of risk. Nio Class A is currently generating about 0.0 per unit of volatility. If you would invest  448.00  in Nio Class A on December 27, 2024 and sell it today you would lose (26.00) from holding Nio Class A or give up 5.8% of portfolio value over 90 days.

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

NWTN Class B  vs.  Nio Class A

NWTN Class B

Risk-Adjusted Performance

Very Weak

Over the last 90 days NWTN Class B 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 very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 very healthy forward indicators, Nio is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NWTN and Nio

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

The idea behind NWTN Class B and Nio Class A 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..