Correlation Between NWTN and Aptiv PLC

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Can any of the company-specific risk be diversified away by investing in both NWTN and Aptiv PLC 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 NWTN and Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NWTN Class B and Aptiv PLC, you can compare the effects of market volatilities on NWTN and Aptiv PLC 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 NWTN with a short position of Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NWTN and Aptiv PLC.

Diversification Opportunities for NWTN and Aptiv PLC

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between NWTN and Aptiv is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding NWTN Class B and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and NWTN 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 NWTN Class B are associated (or correlated) with Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of NWTN i.e., NWTN and Aptiv PLC go up and down completely randomly.

Pair Corralation between NWTN and Aptiv PLC

Given the investment horizon of 90 days NWTN Class B is expected to under-perform the Aptiv PLC. In addition to that, NWTN is 4.89 times more volatile than Aptiv PLC. It trades about -0.1 of its total potential returns per unit of risk. Aptiv PLC is currently generating about -0.07 per unit of volatility. If you would invest  8,440  in Aptiv PLC on August 2, 2024 and sell it today you would lose (1,533) from holding Aptiv PLC or give up 18.16% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

NWTN Class B  vs.  Aptiv PLC

 Performance 
       Timeline  
NWTN Class B 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in NWTN Class B are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, NWTN displayed solid returns over the last few months and may actually be approaching a breakup point.
Aptiv PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aptiv PLC is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

NWTN and Aptiv PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NWTN and Aptiv PLC

The main advantage of trading using opposite NWTN and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NWTN position performs unexpectedly, Aptiv PLC 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.
The idea behind NWTN Class B and Aptiv PLC 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.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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