Correlation Between Stellantis and Canoo

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

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

Diversification Opportunities for Stellantis and Canoo

0.38

Correlation Coefficient

Stellantis  Canoo

Weak diversification

The 3 months correlation between Stellantis and Canoo is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Stellantis NV and Canoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoo Inc 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 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 Stellantis i.e., Stellantis and Canoo go up and down completely randomly.

Pair Corralation between Stellantis and Canoo

Given the investment horizon of 90 days Stellantis NV is expected to generate 0.23 times more return on investment than Canoo. However, Stellantis NV is 4.34 times less risky than Canoo. It trades about -0.08 of its potential returns per unit of risk. Canoo Inc is currently generating about -0.22 per unit of risk. If you would invest  1,542  in Stellantis NV on September 19, 2024 and sell it today you would lose (224.00) from holding Stellantis NV or give up 14.53% of portfolio value over 90 days.

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

Stellantis NV  vs.  Canoo Inc

Stellantis NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stellantis NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company 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 Stellantis and Canoo

The main advantage of trading using opposite Stellantis and Canoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellantis 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 Stellantis NV 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.