Correlation Between Nissan and Xpeng
Can any of the company-specific risk be diversified away by investing in both Nissan and Xpeng 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 Xpeng 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 Xpeng Inc, you can compare the effects of market volatilities on Nissan and Xpeng 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 Xpeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissan and Xpeng.
Diversification Opportunities for Nissan and Xpeng
Poor diversification
The 3 months correlation between Nissan and Xpeng is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nissan Motor Co and Xpeng Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xpeng Inc 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 Xpeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xpeng Inc has no effect on the direction of Nissan i.e., Nissan and Xpeng go up and down completely randomly.
Pair Corralation between Nissan and Xpeng
Assuming the 90 days horizon Nissan Motor Co is expected to generate 0.36 times more return on investment than Xpeng. However, Nissan Motor Co is 2.74 times less risky than Xpeng. It trades about 0.25 of its potential returns per unit of risk. Xpeng Inc is currently generating about 0.04 per unit of risk. If you would invest 759.00 in Nissan Motor Co on August 31, 2024 and sell it today you would earn a total of 109.00 from holding Nissan Motor Co or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 8.29% |
| Values | Daily Returns |
Nissan Motor Co vs. Xpeng Inc
Performance |
| Timeline |
| Nissan Motor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Xpeng Inc |
Nissan and Xpeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nissan and Xpeng
The main advantage of trading using opposite Nissan and Xpeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nissan position performs unexpectedly, Xpeng 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 Xpeng will offset losses from the drop in Xpeng's long position.| Nissan vs. Honda Motor Co | Nissan vs. Toyota Motor | Nissan vs. Hyundai Motor Co | Nissan 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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