Correlation Between Nissan and Canoo

Can any of the company-specific risk be diversified away by investing in both Nissan and Canoo 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 Canoo 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 Canoo Inc, you can compare the effects of market volatilities on Nissan and Canoo 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 Canoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissan and Canoo.

Diversification Opportunities for Nissan and Canoo

-0.8

Correlation Coefficient

Nissan  Canoo

Pay attention - limited upside

The 3 months correlation between Nissan and Canoo is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nissan Motor Co and Canoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoo Inc 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 Canoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoo Inc has no effect on the direction of Nissan i.e., Nissan and Canoo go up and down completely randomly.

Pair Corralation between Nissan and Canoo

If you would invest  868.00  in Nissan Motor Co on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Nissan Motor Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Nissan Motor Co  vs.  Canoo Inc

Nissan Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nissan Motor Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nissan is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Canoo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canoo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nissan and Canoo

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

The idea behind Nissan Motor Co and Canoo Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.