Correlation Between EZGO Technologies and Life Electric
Can any of the company-specific risk be diversified away by investing in both EZGO Technologies and Life 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 EZGO Technologies and Life Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EZGO Technologies and Life Electric Vehicles, you can compare the effects of market volatilities on EZGO Technologies and Life 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 EZGO Technologies with a short position of Life Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of EZGO Technologies and Life Electric.
Diversification Opportunities for EZGO Technologies and Life Electric
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EZGO and Life is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding EZGO Technologies and Life Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Electric Vehicles and EZGO Technologies 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 EZGO Technologies are associated (or correlated) with Life Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Electric Vehicles has no effect on the direction of EZGO Technologies i.e., EZGO Technologies and Life Electric go up and down completely randomly.
Pair Corralation between EZGO Technologies and Life Electric
Given the investment horizon of 90 days EZGO Technologies is expected to under-perform the Life Electric. But the stock apears to be less risky and, when comparing its historical volatility, EZGO Technologies is 2.93 times less risky than Life Electric. The stock trades about -0.13 of its potential returns per unit of risk. The Life Electric Vehicles is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Life Electric Vehicles on August 31, 2024 and sell it today you would lose (15.00) from holding Life Electric Vehicles or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EZGO Technologies vs. Life Electric Vehicles
Performance |
| Timeline |
| EZGO Technologies |
| Life Electric Vehicles |
EZGO Technologies and Life Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EZGO Technologies and Life Electric
The main advantage of trading using opposite EZGO Technologies and Life Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EZGO Technologies position performs unexpectedly, Life 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 Life Electric will offset losses from the drop in Life Electric's long position.| EZGO Technologies vs. Vision Marine Technologies | EZGO Technologies vs. Marine Products | EZGO Technologies vs. Thor Industries | EZGO Technologies vs. BRP Inc |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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