Correlation Between NWTN and Ferrari NV
Can any of the company-specific risk be diversified away by investing in both NWTN and Ferrari NV 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 Ferrari NV 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 Ferrari NV, you can compare the effects of market volatilities on NWTN and Ferrari NV 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 Ferrari NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of NWTN and Ferrari NV.
Diversification Opportunities for NWTN and Ferrari NV
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NWTN and Ferrari is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding NWTN Class B and Ferrari NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrari NV 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 Ferrari NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrari NV has no effect on the direction of NWTN i.e., NWTN and Ferrari NV go up and down completely randomly.
Pair Corralation between NWTN and Ferrari NV
Given the investment horizon of 90 days NWTN Class B is expected to under-perform the Ferrari NV. In addition to that, NWTN is 3.9 times more volatile than Ferrari NV. It trades about -0.12 of its total potential returns per unit of risk. Ferrari NV is currently generating about 0.06 per unit of volatility. If you would invest 43,740 in Ferrari NV on December 1, 2024 and sell it today you would earn a total of 2,717 from holding Ferrari NV or generate 6.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NWTN Class B vs. Ferrari NV
Performance |
Timeline |
NWTN Class B |
Ferrari NV |
NWTN and Ferrari NV Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NWTN and Ferrari NV
The main advantage of trading using opposite NWTN and Ferrari NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NWTN position performs unexpectedly, Ferrari NV 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 Ferrari NV will offset losses from the drop in Ferrari NV's long position.The idea behind NWTN Class B and Ferrari 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.Ferrari NV vs. Volkswagen AG Pref | Ferrari NV vs. Volkswagen AG 110 | Ferrari NV vs. Porsche Automobil Holding | Ferrari NV vs. Toyota Motor |
Check out your portfolio center.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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