Correlation Between Fiat Chrysler and Nio

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Can any of the company-specific risk be diversified away by investing in both Fiat Chrysler 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 Fiat Chrysler and Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fiat Chrysler Automobiles and Nio Class A, you can compare the effects of market volatilities on Fiat Chrysler 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 Fiat Chrysler with a short position of Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiat Chrysler and Nio.

Diversification Opportunities for Fiat Chrysler and Nio

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Fiat and Nio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fiat Chrysler Automobiles 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 Fiat Chrysler 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 Fiat Chrysler Automobiles 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 Fiat Chrysler i.e., Fiat Chrysler and Nio go up and down completely randomly.

Pair Corralation between Fiat Chrysler and Nio

If you would invest (100.00) in Fiat Chrysler Automobiles on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Fiat Chrysler Automobiles or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Fiat Chrysler Automobiles  vs.  Nio Class A

 Performance 
       Timeline  
Fiat Chrysler Automobiles 

Risk-Adjusted Performance

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Over the last 90 days Fiat Chrysler Automobiles has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fiat Chrysler is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
Nio Class A 

Risk-Adjusted Performance

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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 weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fiat Chrysler and Nio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fiat Chrysler and Nio

The main advantage of trading using opposite Fiat Chrysler and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiat Chrysler 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 Fiat Chrysler Automobiles 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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