Correlation Between Fisker and Porsche Automobile
Can any of the company-specific risk be diversified away by investing in both Fisker and Porsche Automobile 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 Fisker and Porsche Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fisker Inc and Porsche Automobile Holding, you can compare the effects of market volatilities on Fisker and Porsche Automobile 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 Fisker with a short position of Porsche Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fisker and Porsche Automobile.
Diversification Opportunities for Fisker and Porsche Automobile
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fisker and Porsche is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fisker Inc and Porsche Automobile Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porsche Automobile and Fisker 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 Fisker Inc are associated (or correlated) with Porsche Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porsche Automobile has no effect on the direction of Fisker i.e., Fisker and Porsche Automobile go up and down completely randomly.
Pair Corralation between Fisker and Porsche Automobile
Considering the 90-day investment horizon Fisker Inc is expected to generate 3.62 times more return on investment than Porsche Automobile. However, Fisker is 3.62 times more volatile than Porsche Automobile Holding. It trades about 0.07 of its potential returns per unit of risk. Porsche Automobile Holding is currently generating about -0.07 per unit of risk. If you would invest 570.00 in Fisker Inc on August 31, 2024 and sell it today you would earn a total of 45.00 from holding Fisker Inc or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.31% |
| Values | Daily Returns |
Fisker Inc vs. Porsche Automobile Holding
Performance |
| Timeline |
| Fisker Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Porsche Automobile |
Fisker and Porsche Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fisker and Porsche Automobile
The main advantage of trading using opposite Fisker and Porsche Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fisker position performs unexpectedly, Porsche Automobile 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 Automobile will offset losses from the drop in Porsche Automobile's long position.The idea behind Fisker Inc and Porsche Automobile 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.| Porsche Automobile vs. Volkswagen AG 110 | Porsche Automobile vs. Stellantis NV | Porsche Automobile vs. Toyota Motor | Porsche Automobile vs. Honda Motor Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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