Correlation Between Commercial Vehicle and Lion Electric
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle 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 Commercial Vehicle and Lion Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and Lion Electric Corp, you can compare the effects of market volatilities on Commercial Vehicle 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 Commercial Vehicle with a short position of Lion Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and Lion Electric.
Diversification Opportunities for Commercial Vehicle and Lion Electric
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Commercial and Lion is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle 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 Commercial Vehicle 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 Commercial Vehicle 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 Commercial Vehicle i.e., Commercial Vehicle and Lion Electric go up and down completely randomly.
Pair Corralation between Commercial Vehicle and Lion Electric
Given the investment horizon of 90 days Commercial Vehicle Group is expected to under-perform the Lion Electric. But the stock apears to be less risky and, when comparing its historical volatility, Commercial Vehicle Group is 2.05 times less risky than Lion Electric. The stock trades about -0.12 of its potential returns per unit of risk. The Lion Electric Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 104.00 in Lion Electric Corp on September 13, 2024 and sell it today you would lose (69.10) from holding Lion Electric Corp or give up 66.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. Lion Electric Corp
Performance |
| Timeline |
| Commercial Vehicle |
| Lion Electric Corp |
Commercial Vehicle and Lion Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and Lion Electric
The main advantage of trading using opposite Commercial Vehicle and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle 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.| Commercial Vehicle vs. Motorcar Parts of | Commercial Vehicle vs. Monro Muffler Brake | Commercial Vehicle vs. Stoneridge | Commercial Vehicle vs. Superior Industries International |
| Lion Electric vs. Xos Inc | Lion Electric vs. Ideanomics | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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