Correlation Between Canoo and Aston Martin
Can any of the company-specific risk be diversified away by investing in both Canoo and Aston Martin 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 Canoo and Aston Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canoo Inc and Aston Martin Lagonda, you can compare the effects of market volatilities on Canoo and Aston Martin 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 Canoo with a short position of Aston Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoo and Aston Martin.
Diversification Opportunities for Canoo and Aston Martin
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canoo and Aston is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Inc and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda and Canoo 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 Canoo Inc are associated (or correlated) with Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Canoo i.e., Canoo and Aston Martin go up and down completely randomly.
Pair Corralation between Canoo and Aston Martin
Given the investment horizon of 90 days Canoo Inc is expected to under-perform the Aston Martin. In addition to that, Canoo is 1.67 times more volatile than Aston Martin Lagonda. It trades about -0.07 of its total potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.02 per unit of volatility. If you would invest 332.00 in Aston Martin Lagonda on August 31, 2024 and sell it today you would lose (189.00) from holding Aston Martin Lagonda or give up 56.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canoo Inc vs. Aston Martin Lagonda
Performance |
| Timeline |
| Canoo Inc |
| Aston Martin Lagonda |
Canoo and Aston Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canoo and Aston Martin
The main advantage of trading using opposite Canoo and Aston Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoo position performs unexpectedly, Aston Martin 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 Aston Martin will offset losses from the drop in Aston Martin's long position.The idea behind Canoo Inc and Aston Martin Lagonda 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.| Aston Martin vs. Polestar Automotive Holding | Aston Martin vs. Geely Automobile Holdings | Aston Martin vs. Mercedes Benz Group AG | Aston Martin vs. Porsche Automobile Holding |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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