Correlation Between Nissan and Honda
Can any of the company-specific risk be diversified away by investing in both Nissan and Honda 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 Nissan and Honda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nissan Motor Co and Honda Motor Co, you can compare the effects of market volatilities on Nissan and Honda 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 Nissan with a short position of Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissan and Honda.
Diversification Opportunities for Nissan and Honda
Excellent diversification
The 3 months correlation between Nissan and Honda is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nissan Motor Co and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor and Nissan 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 Nissan Motor Co are associated (or correlated) with Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Nissan i.e., Nissan and Honda go up and down completely randomly.
Pair Corralation between Nissan and Honda
If you would invest 868.00 in Nissan Motor Co on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Nissan Motor Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 2.33% |
| Values | Daily Returns |
Nissan Motor Co vs. Honda Motor Co
Performance |
| Timeline |
| Nissan Motor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Honda Motor |
Nissan and Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nissan and Honda
The main advantage of trading using opposite Nissan and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nissan position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda's long position.| Nissan vs. Honda Motor Co | Nissan vs. Toyota Motor | Nissan vs. Hyundai Motor Co | Nissan vs. Bayerische Motoren Werke |
| Honda vs. Bayerische Motoren Werke | Honda vs. Volkswagen AG VZO | Honda vs. Volkswagen AG | Honda vs. Bayerische Motoren Werke |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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