Correlation Between NWTN Warrant and Canoo

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

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

Diversification Opportunities for NWTN Warrant and Canoo

0.63

Correlation Coefficient

NWTN Warrant  Canoo

Poor diversification

The 3 months correlation between NWTN and Canoo is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NWTN Warrant and Canoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoo Inc and NWTN Warrant 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 Warrant 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 NWTN Warrant i.e., NWTN Warrant and Canoo go up and down completely randomly.

Pair Corralation between NWTN Warrant and Canoo

Assuming the 90 days horizon NWTN Warrant is expected to generate 1.83 times more return on investment than Canoo. However, NWTN Warrant is 1.83 times more volatile than Canoo Inc. It trades about 0.15 of its potential returns per unit of risk. Canoo Inc is currently generating about 0.09 per unit of risk. If you would invest  3.50  in NWTN Warrant on January 31, 2024 and sell it today you would earn a total of  1.51  from holding NWTN Warrant or generate 43.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	80.49%
Values	Daily Returns

NWTN Warrant  vs.  Canoo Inc

NWTN Warrant

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NWTN Warrant are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, NWTN Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Canoo Inc

Risk-Adjusted Performance

0 of 100

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 fairly stable technical and fundamental indicators, Canoo is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with NWTN Warrant and Canoo

The main advantage of trading using opposite NWTN Warrant and Canoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NWTN Warrant 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 NWTN Warrant 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.