Correlation Between Envirotech Vehicles and Nio
Can any of the company-specific risk be diversified away by investing in both Envirotech Vehicles 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 Envirotech Vehicles and Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Envirotech Vehicles and Nio Class A, you can compare the effects of market volatilities on Envirotech Vehicles 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 Envirotech Vehicles with a short position of Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Envirotech Vehicles and Nio.
Diversification Opportunities for Envirotech Vehicles and Nio
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Envirotech and Nio is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Envirotech Vehicles 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 Envirotech Vehicles 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 Envirotech Vehicles 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 Envirotech Vehicles i.e., Envirotech Vehicles and Nio go up and down completely randomly.
Pair Corralation between Envirotech Vehicles and Nio
Given the investment horizon of 90 days Envirotech Vehicles is expected to under-perform the Nio. In addition to that, Envirotech Vehicles is 1.08 times more volatile than Nio Class A. It trades about -0.15 of its total potential returns per unit of risk. Nio Class A is currently generating about 0.02 per unit of volatility. If you would invest 450.00 in Nio Class A on January 28, 2024 and sell it today you would lose (1.00) from holding Nio Class A or give up 0.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Envirotech Vehicles vs. Nio Class A
Performance |
Timeline |
Envirotech Vehicles |
Nio Class A |
Envirotech Vehicles and Nio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Envirotech Vehicles and Nio
The main advantage of trading using opposite Envirotech Vehicles and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Envirotech Vehicles 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.Envirotech Vehicles vs. Pfizer Inc | Envirotech Vehicles vs. Hertz Global Holdings | Envirotech Vehicles vs. EASTMAN CHEM 45 | Envirotech Vehicles vs. Fuller Thaler Behavioral |
Nio vs. Pfizer Inc | Nio vs. Hertz Global Holdings | Nio vs. EASTMAN CHEM 45 | Nio vs. Fuller Thaler Behavioral |
Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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