Correlation Between Stellantis and Nio

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

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

Diversification Opportunities for Stellantis and Nio

-0.05

Correlation Coefficient

Stellantis  Nio

Good diversification

The 3 months correlation between Stellantis and Nio is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stellantis NV 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 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 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 Stellantis i.e., Stellantis and Nio go up and down completely randomly.

Pair Corralation between Stellantis and Nio

Given the investment horizon of 90 days Stellantis NV is expected to generate 0.6 times more return on investment than Nio. However, Stellantis NV is 1.67 times less risky than Nio. It trades about -0.05 of its potential returns per unit of risk. Nio Class A is currently generating about -0.04 per unit of risk. If you would invest  1,304  in Stellantis NV on December 29, 2024 and sell it today you would lose (123.00) from holding Stellantis NV or give up 9.43% of portfolio value over 90 days.

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

Stellantis NV  vs.  Nio Class A

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.

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 latest inconsistent performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Stellantis and Nio

The main advantage of trading using opposite Stellantis and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellantis 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 Stellantis NV 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.