Correlation Between Nio and Fiat Chrysler

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

Diversification Opportunities for Nio and Fiat Chrysler

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Nio and Fiat Chrysler

If you would invest (100.00) in Fiat Chrysler Automobiles on December 30, 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

Nio Class A  vs.  Fiat Chrysler Automobiles

 Performance 
       Timeline  
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 Automobiles 

Risk-Adjusted Performance

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Low
 
High
Very Weak
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 and Fiat Chrysler Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nio and Fiat Chrysler

The main advantage of trading using opposite Nio and Fiat Chrysler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio 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 Nio Class A 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.
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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