Correlation Between Exor NV and Phoenix

Can any of the company-specific risk be diversified away by investing in both Exor NV and Phoenix 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 Exor NV and Phoenix into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exor NV and Phoenix Motor Common, you can compare the effects of market volatilities on Exor NV and Phoenix 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 Exor NV with a short position of Phoenix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exor NV and Phoenix.

Diversification Opportunities for Exor NV and Phoenix

0.41

Correlation Coefficient

Exor NV  Phoenix

Very weak diversification

The 3 months correlation between Exor and Phoenix is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Exor NV and Phoenix Motor Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Motor Common and Exor 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 Exor NV are associated (or correlated) with Phoenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Motor Common has no effect on the direction of Exor NV i.e., Exor NV and Phoenix go up and down completely randomly.

Pair Corralation between Exor NV and Phoenix

Assuming the 90 days horizon Exor NV is expected to under-perform the Phoenix. But the pink sheet apears to be less risky and, when comparing its historical volatility, Exor NV is 20.05 times less risky than Phoenix. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Phoenix Motor Common is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Phoenix Motor Common on September 15, 2024 and sell it today you would lose (14.00) from holding Phoenix Motor Common or give up 31.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Exor NV  vs.  Phoenix Motor Common

Exor NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exor NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Phoenix Motor Common

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Phoenix Motor Common are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Phoenix showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exor NV and Phoenix

The main advantage of trading using opposite Exor NV and Phoenix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exor NV position performs unexpectedly, Phoenix 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 Phoenix will offset losses from the drop in Phoenix's long position.

The idea behind Exor NV and Phoenix Motor Common 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.