Correlation Between Ferrari NV and Hyzon Motors
Can any of the company-specific risk be diversified away by investing in both Ferrari NV and Hyzon 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 Ferrari NV and Hyzon Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrari NV and Hyzon Motors, you can compare the effects of market volatilities on Ferrari NV and Hyzon 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 Ferrari NV with a short position of Hyzon Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrari NV and Hyzon Motors.
Diversification Opportunities for Ferrari NV and Hyzon Motors
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ferrari and Hyzon is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ferrari NV and Hyzon Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyzon Motors and Ferrari NV 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 Ferrari NV are associated (or correlated) with Hyzon Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyzon Motors has no effect on the direction of Ferrari NV i.e., Ferrari NV and Hyzon Motors go up and down completely randomly.
Pair Corralation between Ferrari NV and Hyzon Motors
Given the investment horizon of 90 days Ferrari NV is expected to under-perform the Hyzon Motors. But the stock apears to be less risky and, when comparing its historical volatility, Ferrari NV is 2.49 times less risky than Hyzon Motors. The stock trades about -0.23 of its potential returns per unit of risk. The Hyzon Motors is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 181.00 in Hyzon Motors on August 31, 2024 and sell it today you would lose (16.00) from holding Hyzon Motors or give up 8.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrari NV vs. Hyzon Motors
Performance |
| Timeline |
| Ferrari NV |
| Hyzon Motors |
Ferrari NV and Hyzon Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrari NV and Hyzon Motors
The main advantage of trading using opposite Ferrari NV and Hyzon Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrari NV position performs unexpectedly, Hyzon 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 Hyzon Motors will offset losses from the drop in Hyzon Motors' long position.| Ferrari NV vs. Tesla Inc | Ferrari NV vs. Li Auto | Ferrari NV vs. Rivian Automotive | Ferrari NV vs. Lucid Group |
| Hyzon Motors vs. Mullen Automotive | Hyzon Motors vs. Canoo Inc | Hyzon Motors vs. Faraday Future Intelligent | Hyzon Motors vs. Polestar Automotive Holding |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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