Correlation Between LiveWire and Nio
Can any of the company-specific risk be diversified away by investing in both LiveWire and Nio 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 LiveWire and Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LiveWire Group and Nio Class A, you can compare the effects of market volatilities on LiveWire and Nio 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 LiveWire with a short position of Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiveWire and Nio.
Diversification Opportunities for LiveWire and Nio
Very good diversification
The 3 months correlation between LiveWire and Nio is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding LiveWire Group and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A and LiveWire 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 LiveWire Group are associated (or correlated) with Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of LiveWire i.e., LiveWire and Nio go up and down completely randomly.
Pair Corralation between LiveWire and Nio
Given the investment horizon of 90 days LiveWire Group is expected to generate 0.93 times more return on investment than Nio. However, LiveWire Group is 1.08 times less risky than Nio. It trades about 0.02 of its potential returns per unit of risk. Nio Class A is currently generating about -0.26 per unit of risk. If you would invest 593.00 in LiveWire Group on August 30, 2024 and sell it today you would earn a total of 3.00 from holding LiveWire Group or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LiveWire Group vs. Nio Class A
Performance |
| Timeline |
| LiveWire Group |
| Nio Class A |
LiveWire and Nio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LiveWire and Nio
The main advantage of trading using opposite LiveWire and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiveWire position performs unexpectedly, Nio 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 Nio will offset losses from the drop in Nio's long position.| LiveWire vs. Toyota Motor | LiveWire vs. Ferrari NV | LiveWire vs. Stellantis NV | LiveWire vs. General Motors |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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