Correlation Between Stellantis and Gogoro Equity

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

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

Diversification Opportunities for Stellantis and Gogoro Equity

0.36

Correlation Coefficient

Stellantis  Gogoro Equity

Weak diversification

The 3 months correlation between Stellantis and Gogoro is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Stellantis NV and Gogoro Equity Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gogoro Equity Warrant 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 Gogoro Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gogoro Equity Warrant has no effect on the direction of Stellantis i.e., Stellantis and Gogoro Equity go up and down completely randomly.

Pair Corralation between Stellantis and Gogoro Equity

Given the investment horizon of 90 days Stellantis NV is expected to under-perform the Gogoro Equity. But the stock apears to be less risky and, when comparing its historical volatility, Stellantis NV is 7.8 times less risky than Gogoro Equity. The stock trades about -0.07 of its potential returns per unit of risk. The Gogoro Equity Warrant is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1.97  in Gogoro Equity Warrant on December 30, 2024 and sell it today you would earn a total of  0.60  from holding Gogoro Equity Warrant or generate 30.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.71%
Values	Daily Returns

Stellantis NV  vs.  Gogoro Equity Warrant

Stellantis NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellantis NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Gogoro Equity Warrant

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gogoro Equity Warrant are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Gogoro Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stellantis and Gogoro Equity

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

The idea behind Stellantis NV and Gogoro Equity Warrant 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.