Correlation Between Nio and Isuzu Motors
Can any of the company-specific risk be diversified away by investing in both Nio and Isuzu Motors 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 Isuzu Motors 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 Isuzu Motors Limited, you can compare the effects of market volatilities on Nio and Isuzu Motors 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 Isuzu Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio and Isuzu Motors.
Diversification Opportunities for Nio and Isuzu Motors
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nio and Isuzu is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Isuzu Motors Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isuzu Motors Limited 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 Isuzu Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isuzu Motors Limited has no effect on the direction of Nio i.e., Nio and Isuzu Motors go up and down completely randomly.
Pair Corralation between Nio and Isuzu Motors
Considering the 90-day investment horizon Nio Class A is expected to under-perform the Isuzu Motors. In addition to that, Nio is 1.05 times more volatile than Isuzu Motors Limited. It trades about -0.02 of its total potential returns per unit of risk. Isuzu Motors Limited is currently generating about 0.03 per unit of volatility. If you would invest 1,265 in Isuzu Motors Limited on September 2, 2024 and sell it today you would earn a total of 85.00 from holding Isuzu Motors Limited or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 57.53% |
| Values | Daily Returns |
Nio Class A vs. Isuzu Motors Limited
Performance |
| Timeline |
| Nio Class A |
| Isuzu Motors Limited |
Nio and Isuzu Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nio and Isuzu Motors
The main advantage of trading using opposite Nio and Isuzu Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio position performs unexpectedly, Isuzu Motors 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 Isuzu Motors will offset losses from the drop in Isuzu Motors' long position.The idea behind Nio Class A and Isuzu Motors Limited 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.| Isuzu Motors vs. General Motors | Isuzu Motors vs. Tesla Inc | Isuzu Motors vs. Rivian Automotive | Isuzu Motors vs. Nio Class A |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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