Correlation Between Li Auto and NWTN Warrant
Can any of the company-specific risk be diversified away by investing in both Li Auto and NWTN Warrant 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 Li Auto and NWTN Warrant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Auto and NWTN Warrant, you can compare the effects of market volatilities on Li Auto and NWTN Warrant 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 Li Auto with a short position of NWTN Warrant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Auto and NWTN Warrant.
Diversification Opportunities for Li Auto and NWTN Warrant
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Li Auto and NWTN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Li Auto and NWTN Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NWTN Warrant and Li Auto 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 Li Auto are associated (or correlated) with NWTN Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NWTN Warrant has no effect on the direction of Li Auto i.e., Li Auto and NWTN Warrant go up and down completely randomly.
Pair Corralation between Li Auto and NWTN Warrant
Allowing for the 90-day total investment horizon Li Auto is expected to generate 118.6 times less return on investment than NWTN Warrant. But when comparing it to its historical volatility, Li Auto is 18.91 times less risky than NWTN Warrant. It trades about 0.01 of its potential returns per unit of risk. NWTN Warrant is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14.00 in NWTN Warrant on January 8, 2025 and sell it today you would lose (11.35) from holding NWTN Warrant or give up 81.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 81.38% |
| Values | Daily Returns |
Li Auto vs. NWTN Warrant
Performance |
| Timeline |
| Li Auto |
| NWTN Warrant |
Li Auto and NWTN Warrant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Auto and NWTN Warrant
The main advantage of trading using opposite Li Auto and NWTN Warrant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Auto position performs unexpectedly, NWTN Warrant 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 Warrant will offset losses from the drop in NWTN Warrant's long position.The idea behind Li Auto and NWTN Warrant 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.| NWTN Warrant vs. NWTN Class B | NWTN Warrant vs. Blade Air Mobility | NWTN Warrant vs. NewAmsterdam Pharma | NWTN Warrant vs. Alpha Tau Medical |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |