Correlation Between Honda and Fiat Chrysler
Can any of the company-specific risk be diversified away by investing in both Honda and Fiat Chrysler 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 Honda and Fiat Chrysler into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honda Motor Co and Fiat Chrysler Automobiles, you can compare the effects of market volatilities on Honda and Fiat Chrysler 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 Honda with a short position of Fiat Chrysler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honda and Fiat Chrysler.
Diversification Opportunities for Honda and Fiat Chrysler
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Honda and Fiat is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Honda Motor Co and Fiat Chrysler Automobiles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiat Chrysler Automobiles and Honda 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 Honda Motor Co are associated (or correlated) with Fiat Chrysler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiat Chrysler Automobiles has no effect on the direction of Honda i.e., Honda and Fiat Chrysler go up and down completely randomly.
Pair Corralation between Honda and Fiat Chrysler
If you would invest (100.00) in Fiat Chrysler Automobiles on January 20, 2024 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 Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Honda Motor Co vs. Fiat Chrysler Automobiles
Performance |
| Timeline |
| Honda Motor |
| Fiat Chrysler Automobiles |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Honda and Fiat Chrysler Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honda and Fiat Chrysler
The main advantage of trading using opposite Honda and Fiat Chrysler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honda position performs unexpectedly, Fiat Chrysler 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 Fiat Chrysler will offset losses from the drop in Fiat Chrysler's long position.The idea behind Honda Motor Co and Fiat Chrysler Automobiles 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.| Fiat Chrysler vs. Zhihu Inc ADR | Fiat Chrysler vs. Bm Technologies | Fiat Chrysler vs. Cadence Design Systems | Fiat Chrysler vs. Getty Images Holdings |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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