Correlation Between Barnes and Lion Electric
Can any of the company-specific risk be diversified away by investing in both Barnes and Lion Electric 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 Barnes and Lion Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Lion Electric Corp, you can compare the effects of market volatilities on Barnes and Lion Electric 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 Barnes with a short position of Lion Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Lion Electric.
Diversification Opportunities for Barnes and Lion Electric
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barnes and Lion is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Lion Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Electric Corp and Barnes 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 Barnes Group are associated (or correlated) with Lion Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Electric Corp has no effect on the direction of Barnes i.e., Barnes and Lion Electric go up and down completely randomly.
Pair Corralation between Barnes and Lion Electric
Taking into account the 90-day investment horizon Barnes Group is expected to generate 0.5 times more return on investment than Lion Electric. However, Barnes Group is 1.99 times less risky than Lion Electric. It trades about 0.03 of its potential returns per unit of risk. Lion Electric Corp is currently generating about -0.08 per unit of risk. If you would invest 3,893 in Barnes Group on August 27, 2024 and sell it today you would earn a total of 789.00 from holding Barnes Group or generate 20.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Lion Electric Corp
Performance |
| Timeline |
| Barnes Group |
| Lion Electric Corp |
Barnes and Lion Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Lion Electric
The main advantage of trading using opposite Barnes and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Lion Electric 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 Lion Electric will offset losses from the drop in Lion Electric's long position.| Barnes vs. Aquagold International | Barnes vs. Morningstar Unconstrained Allocation | Barnes vs. High Yield Municipal Fund | Barnes vs. Thrivent High Yield |
| Lion Electric vs. Xos Inc | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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