Correlation Between Ferrari NV and Stellantis

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

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

Diversification Opportunities for Ferrari NV and Stellantis

0.53

Correlation Coefficient

Ferrari NV  Stellantis

Very weak diversification

The 3 months correlation between Ferrari and Stellantis is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ferrari NV and Stellantis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellantis NV and Ferrari NV 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 Ferrari NV 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 Ferrari NV i.e., Ferrari NV and Stellantis go up and down completely randomly.

Pair Corralation between Ferrari NV and Stellantis

Given the investment horizon of 90 days Ferrari NV is expected to generate 0.65 times more return on investment than Stellantis. However, Ferrari NV is 1.53 times less risky than Stellantis. It trades about -0.1 of its potential returns per unit of risk. Stellantis NV is currently generating about -0.11 per unit of risk. If you would invest  48,668  in Ferrari NV on September 1, 2024 and sell it today you would lose (5,252) from holding Ferrari NV or give up 10.79% of portfolio value over 90 days.

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

Ferrari NV  vs.  Stellantis NV

Ferrari NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ferrari NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Stellantis NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stellantis NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ferrari NV and Stellantis

The main advantage of trading using opposite Ferrari NV and Stellantis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrari NV 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 Ferrari NV 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.