Correlation Between Nissan and Dowlais Group
Can any of the company-specific risk be diversified away by investing in both Nissan and Dowlais Group 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 Dowlais Group 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 Dowlais Group plc, you can compare the effects of market volatilities on Nissan and Dowlais Group 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 Dowlais Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissan and Dowlais Group.
Diversification Opportunities for Nissan and Dowlais Group
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nissan and Dowlais is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nissan Motor Co and Dowlais Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dowlais Group plc 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 Dowlais Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dowlais Group plc has no effect on the direction of Nissan i.e., Nissan and Dowlais Group go up and down completely randomly.
Pair Corralation between Nissan and Dowlais Group
Assuming the 90 days horizon Nissan Motor Co is expected to generate 0.57 times more return on investment than Dowlais Group. However, Nissan Motor Co is 1.74 times less risky than Dowlais Group. It trades about 0.39 of its potential returns per unit of risk. Dowlais Group plc is currently generating about -0.05 per unit of risk. If you would invest 744.00 in Nissan Motor Co on March 21, 2024 and sell it today you would earn a total of 124.00 from holding Nissan Motor Co or generate 16.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 8.06% |
Values | Daily Returns |
Nissan Motor Co vs. Dowlais Group plc
Performance |
Timeline |
Nissan Motor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dowlais Group plc |
Nissan and Dowlais Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nissan and Dowlais Group
The main advantage of trading using opposite Nissan and Dowlais Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nissan position performs unexpectedly, Dowlais Group 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 Dowlais Group will offset losses from the drop in Dowlais Group's long position.Nissan vs. Honda Motor Co | Nissan vs. Toyota Motor | Nissan vs. Hyundai Motor Co | Nissan vs. Bayerische Motoren Werke |
Dowlais Group vs. NVIDIA | Dowlais Group vs. Apple Inc | Dowlais Group vs. Microsoft | Dowlais Group vs. Alphabet Inc Class C |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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