Correlation Between DIRTT Environmental and Lion Electric
Can any of the company-specific risk be diversified away by investing in both DIRTT Environmental 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 DIRTT Environmental and Lion Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DIRTT Environmental Solutions and Lion Electric Corp, you can compare the effects of market volatilities on DIRTT Environmental 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 DIRTT Environmental with a short position of Lion Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIRTT Environmental and Lion Electric.
Diversification Opportunities for DIRTT Environmental and Lion Electric
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DIRTT and Lion is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding DIRTT Environmental Solutions 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 DIRTT Environmental 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 DIRTT Environmental Solutions 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 DIRTT Environmental i.e., DIRTT Environmental and Lion Electric go up and down completely randomly.
Pair Corralation between DIRTT Environmental and Lion Electric
Assuming the 90 days trading horizon DIRTT Environmental Solutions is expected to generate 0.51 times more return on investment than Lion Electric. However, DIRTT Environmental Solutions is 1.95 times less risky than Lion Electric. It trades about 0.05 of its potential returns per unit of risk. Lion Electric Corp is currently generating about -0.38 per unit of risk. If you would invest 92.00 in DIRTT Environmental Solutions on August 29, 2024 and sell it today you would earn a total of 3.00 from holding DIRTT Environmental Solutions or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DIRTT Environmental Solutions vs. Lion Electric Corp
Performance |
| Timeline |
| DIRTT Environmental |
| Lion Electric Corp |
DIRTT Environmental and Lion Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DIRTT Environmental and Lion Electric
The main advantage of trading using opposite DIRTT Environmental and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIRTT Environmental 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.| DIRTT Environmental vs. Knight Therapeutics | DIRTT Environmental vs. Element Fleet Management | DIRTT Environmental vs. Autocanada | DIRTT Environmental vs. Bird Construction |
| Lion Electric vs. Lion Electric Corp | Lion Electric vs. Alimentation Couchen Tard | Lion Electric vs. BRP Inc |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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