Correlation Between Stellantis and Workhorse

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

Diversification Opportunities for Stellantis and Workhorse

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Stellantis and Workhorse is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Stellantis NV and Workhorse Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workhorse Group 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 Workhorse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workhorse Group has no effect on the direction of Stellantis i.e., Stellantis and Workhorse go up and down completely randomly.

Pair Corralation between Stellantis and Workhorse

Given the investment horizon of 90 days Stellantis NV is expected to under-perform the Workhorse. But the stock apears to be less risky and, when comparing its historical volatility, Stellantis NV is 3.38 times less risky than Workhorse. The stock trades about -0.08 of its potential returns per unit of risk. The Workhorse Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  78.00  in Workhorse Group on September 19, 2024 and sell it today you would earn a total of  8.00  from holding Workhorse Group or generate 10.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Stellantis NV  vs.  Workhorse Group

 Performance 
       Timeline  
Stellantis NV 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Workhorse Group 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Workhorse Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, Workhorse unveiled solid returns over the last few months and may actually be approaching a breakup point.

Stellantis and Workhorse Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stellantis and Workhorse

The main advantage of trading using opposite Stellantis and Workhorse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellantis position performs unexpectedly, Workhorse 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 Workhorse will offset losses from the drop in Workhorse's long position.
The idea behind Stellantis NV and Workhorse Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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