Correlation Between Renault SA and Nissan
Can any of the company-specific risk be diversified away by investing in both Renault SA and Nissan 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 Renault SA and Nissan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renault SA and Nissan Motor Co, you can compare the effects of market volatilities on Renault SA and Nissan 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 Renault SA with a short position of Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renault SA and Nissan.
Diversification Opportunities for Renault SA and Nissan
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Renault and Nissan is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Renault SA and Nissan Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan Motor and Renault SA 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 Renault SA are associated (or correlated) with Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan Motor has no effect on the direction of Renault SA i.e., Renault SA and Nissan go up and down completely randomly.
Pair Corralation between Renault SA and Nissan
Assuming the 90 days horizon Renault SA is expected to generate 0.55 times more return on investment than Nissan. However, Renault SA is 1.83 times less risky than Nissan. It trades about 0.04 of its potential returns per unit of risk. Nissan Motor Co is currently generating about -0.01 per unit of risk. If you would invest 686.00 in Renault SA on September 1, 2024 and sell it today you would earn a total of 169.00 from holding Renault SA or generate 24.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.32% |
| Values | Daily Returns |
Renault SA vs. Nissan Motor Co
Performance |
| Timeline |
| Renault SA |
| Nissan Motor |
Renault SA and Nissan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renault SA and Nissan
The main advantage of trading using opposite Renault SA and Nissan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renault SA position performs unexpectedly, Nissan 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 Nissan will offset losses from the drop in Nissan's long position.| Renault SA vs. Volkswagen AG 110 | Renault SA vs. Stellantis NV | Renault SA vs. Toyota Motor | Renault SA vs. Honda Motor Co |
| Nissan vs. Great Wall Motor | Nissan vs. Geely Automobile Holdings | Nissan vs. Geely Automobile Holdings | Nissan vs. Hyundai Motor Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |