Correlation Between Ferrari NV and Suzuki
Can any of the company-specific risk be diversified away by investing in both Ferrari NV and Suzuki 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 Suzuki into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrari NV and Suzuki Motor, you can compare the effects of market volatilities on Ferrari NV and Suzuki 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 Suzuki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrari NV and Suzuki.
Diversification Opportunities for Ferrari NV and Suzuki
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ferrari and Suzuki is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ferrari NV and Suzuki Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzuki Motor 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 Suzuki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzuki Motor has no effect on the direction of Ferrari NV i.e., Ferrari NV and Suzuki go up and down completely randomly.
Pair Corralation between Ferrari NV and Suzuki
Given the investment horizon of 90 days Ferrari NV is expected to generate 1.32 times less return on investment than Suzuki. But when comparing it to its historical volatility, Ferrari NV is 2.03 times less risky than Suzuki. It trades about 0.08 of its potential returns per unit of risk. Suzuki Motor is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 817.00 in Suzuki Motor on September 12, 2024 and sell it today you would earn a total of 183.00 from holding Suzuki Motor or generate 22.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 55.29% |
| Values | Daily Returns |
Ferrari NV vs. Suzuki Motor
Performance |
| Timeline |
| Ferrari NV |
| Suzuki Motor |
Ferrari NV and Suzuki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrari NV and Suzuki
The main advantage of trading using opposite Ferrari NV and Suzuki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrari NV position performs unexpectedly, Suzuki 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 Suzuki will offset losses from the drop in Suzuki's long position.| Ferrari NV vs. Volkswagen AG Pref | Ferrari NV vs. Volkswagen AG 110 | Ferrari NV vs. Porsche Automobil Holding | Ferrari NV vs. Bayerische Motoren Werke |
| Suzuki vs. Volkswagen AG 110 | Suzuki vs. Porsche Automobil Holding | Suzuki vs. Ferrari NV | Suzuki 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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