Correlation Between Nio and Canoo
Can any of the company-specific risk be diversified away by investing in both Nio and Canoo 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 Nio and Canoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nio Class A and Canoo Inc, you can compare the effects of market volatilities on Nio and Canoo 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 Nio with a short position of Canoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio and Canoo.
Diversification Opportunities for Nio and Canoo
Very good diversification
The 3 months correlation between Nio and Canoo is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Canoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoo Inc and Nio 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 Nio Class A are associated (or correlated) with Canoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoo Inc has no effect on the direction of Nio i.e., Nio and Canoo go up and down completely randomly.
Pair Corralation between Nio and Canoo
Considering the 90-day investment horizon Nio Class A is expected to generate 0.54 times more return on investment than Canoo. However, Nio Class A is 1.85 times less risky than Canoo. It trades about -0.03 of its potential returns per unit of risk. Canoo Inc is currently generating about -0.07 per unit of risk. If you would invest 1,280 in Nio Class A on August 24, 2024 and sell it today you would lose (810.00) from holding Nio Class A or give up 63.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nio Class A vs. Canoo Inc
Performance |
| Timeline |
| Nio Class A |
| Canoo Inc |
Nio and Canoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nio and Canoo
The main advantage of trading using opposite Nio and Canoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio position performs unexpectedly, Canoo 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 Canoo will offset losses from the drop in Canoo's long position.| Nio vs. Lucid Group | Nio vs. Rivian Automotive | Nio vs. Polestar Automotive Holding | Nio vs. Mullen Automotive |
| Canoo vs. Lucid Group | Canoo vs. Rivian Automotive | Canoo vs. Polestar Automotive Holding | Canoo vs. Mullen Automotive |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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