Correlation Between Broadpeak and Stellantis
Can any of the company-specific risk be diversified away by investing in both Broadpeak and Stellantis 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 Broadpeak and Stellantis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadpeak SA and Stellantis NV, you can compare the effects of market volatilities on Broadpeak and Stellantis 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 Broadpeak with a short position of Stellantis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadpeak and Stellantis.
Diversification Opportunities for Broadpeak and Stellantis
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Broadpeak and Stellantis is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Broadpeak SA and Stellantis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellantis NV and Broadpeak 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 Broadpeak SA are associated (or correlated) with Stellantis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellantis NV has no effect on the direction of Broadpeak i.e., Broadpeak and Stellantis go up and down completely randomly.
Pair Corralation between Broadpeak and Stellantis
Assuming the 90 days trading horizon Broadpeak SA is expected to under-perform the Stellantis. In addition to that, Broadpeak is 1.14 times more volatile than Stellantis NV. It trades about -0.23 of its total potential returns per unit of risk. Stellantis NV is currently generating about -0.15 per unit of volatility. If you would invest 2,018 in Stellantis NV on September 3, 2024 and sell it today you would lose (765.00) from holding Stellantis NV or give up 37.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broadpeak SA vs. Stellantis NV
Performance |
| Timeline |
| Broadpeak SA |
| Stellantis NV |
Broadpeak and Stellantis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadpeak and Stellantis
The main advantage of trading using opposite Broadpeak and Stellantis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadpeak position performs unexpectedly, Stellantis 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 Stellantis will offset losses from the drop in Stellantis' long position.The idea behind Broadpeak SA and Stellantis NV 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.| Stellantis vs. Exail Technologies SA | Stellantis vs. Gaztransport Technigaz SAS | Stellantis vs. Onlineformapro SA | Stellantis vs. Novatech Industries SA |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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