Correlation Between Stellantis and Life Electric
Can any of the company-specific risk be diversified away by investing in both Stellantis and Life Electric 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 Stellantis and Life Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellantis NV and Life Electric Vehicles, you can compare the effects of market volatilities on Stellantis and Life Electric 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 Stellantis with a short position of Life Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellantis and Life Electric.
Diversification Opportunities for Stellantis and Life Electric
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stellantis and Life is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Stellantis NV and Life Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Electric Vehicles and Stellantis 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 Stellantis NV are associated (or correlated) with Life Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Electric Vehicles has no effect on the direction of Stellantis i.e., Stellantis and Life Electric go up and down completely randomly.
Pair Corralation between Stellantis and Life Electric
Given the investment horizon of 90 days Stellantis NV is expected to generate 0.19 times more return on investment than Life Electric. However, Stellantis NV is 5.37 times less risky than Life Electric. It trades about -0.07 of its potential returns per unit of risk. Life Electric Vehicles is currently generating about -0.08 per unit of risk. If you would invest 1,370 in Stellantis NV on September 2, 2024 and sell it today you would lose (50.00) from holding Stellantis NV or give up 3.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stellantis NV vs. Life Electric Vehicles
Performance |
| Timeline |
| Stellantis NV |
| Life Electric Vehicles |
Stellantis and Life Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellantis and Life Electric
The main advantage of trading using opposite Stellantis and Life Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellantis position performs unexpectedly, Life Electric 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 Life Electric will offset losses from the drop in Life Electric's long position.The idea behind Stellantis NV and Life Electric Vehicles pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Life Electric vs. Volkswagen AG 110 | Life Electric vs. Stellantis NV | Life Electric vs. Toyota Motor | Life Electric vs. Honda 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 CEOs Directory module to screen CEOs from public companies around the world.
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