Correlation Between Dana and NWTN
Can any of the company-specific risk be diversified away by investing in both Dana and NWTN 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 Dana and NWTN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Inc and NWTN Class B, you can compare the effects of market volatilities on Dana and NWTN 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 Dana with a short position of NWTN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and NWTN.
Diversification Opportunities for Dana and NWTN
Excellent diversification
The 3 months correlation between Dana and NWTN is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and NWTN Class B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NWTN Class B and Dana 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 Dana Inc are associated (or correlated) with NWTN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NWTN Class B has no effect on the direction of Dana i.e., Dana and NWTN go up and down completely randomly.
Pair Corralation between Dana and NWTN
Considering the 90-day investment horizon Dana Inc is expected to generate 0.35 times more return on investment than NWTN. However, Dana Inc is 2.87 times less risky than NWTN. It trades about -0.04 of its potential returns per unit of risk. NWTN Class B is currently generating about -0.02 per unit of risk. If you would invest 1,573 in Dana Inc on August 24, 2024 and sell it today you would lose (745.00) from holding Dana Inc or give up 47.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Inc vs. NWTN Class B
Performance |
| Timeline |
| Dana Inc |
| NWTN Class B |
Dana and NWTN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana and NWTN
The main advantage of trading using opposite Dana and NWTN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana position performs unexpectedly, NWTN 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 NWTN will offset losses from the drop in NWTN's long position.The idea behind Dana Inc and NWTN Class B 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.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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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