Correlation Between Stellantis and Porsche Automobil

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

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

Diversification Opportunities for Stellantis and Porsche Automobil

0.05

Correlation Coefficient

Stellantis  Porsche Automobil

Significant diversification

The 3 months correlation between Stellantis and Porsche is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stellantis NV and Porsche Automobil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porsche Automobil Holding 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 Porsche Automobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porsche Automobil Holding has no effect on the direction of Stellantis i.e., Stellantis and Porsche Automobil go up and down completely randomly.

Pair Corralation between Stellantis and Porsche Automobil

Given the investment horizon of 90 days Stellantis NV is expected to under-perform the Porsche Automobil. In addition to that, Stellantis is 1.17 times more volatile than Porsche Automobil Holding. It trades about -0.03 of its total potential returns per unit of risk. Porsche Automobil Holding is currently generating about 0.1 per unit of volatility. If you would invest  4,885  in Porsche Automobil Holding on February 20, 2024 and sell it today you would earn a total of  546.00  from holding Porsche Automobil Holding or generate 11.18% return on investment over 90 days.

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

Stellantis NV  vs.  Porsche Automobil Holding

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.

Porsche Automobil Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Porsche Automobil Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Porsche Automobil may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Stellantis and Porsche Automobil

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

The idea behind Stellantis NV and Porsche Automobil Holding 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..