Correlation Between Stellantis and Subaru Corp

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

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

Diversification Opportunities for Stellantis and Subaru Corp

0.17

Correlation Coefficient

Stellantis  Subaru Corp

Average diversification

The 3 months correlation between Stellantis and Subaru is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Stellantis NV and Subaru Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Subaru Corp ADR and Stellantis 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 Stellantis NV are associated (or correlated) with Subaru Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Subaru Corp ADR has no effect on the direction of Stellantis i.e., Stellantis and Subaru Corp go up and down completely randomly.

Pair Corralation between Stellantis and Subaru Corp

Given the investment horizon of 90 days Stellantis is expected to generate 71.14 times less return on investment than Subaru Corp. In addition to that, Stellantis is 1.11 times more volatile than Subaru Corp ADR. It trades about 0.0 of its total potential returns per unit of risk. Subaru Corp ADR is currently generating about 0.03 per unit of volatility. If you would invest  766.00  in Subaru Corp ADR on October 3, 2024 and sell it today you would earn a total of  133.00  from holding Subaru Corp ADR or generate 17.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Stellantis NV  vs.  Subaru Corp ADR

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 somewhat strong essential indicators, Stellantis is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Subaru Corp ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Subaru Corp ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Subaru Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stellantis and Subaru Corp

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

The idea behind Stellantis NV and Subaru Corp ADR 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.