Correlation Between Canoo and Honda
Can any of the company-specific risk be diversified away by investing in both Canoo and Honda 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 Honda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canoo Inc and Honda Motor Co, you can compare the effects of market volatilities on Canoo and Honda 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 Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoo and Honda.
Diversification Opportunities for Canoo and Honda
Very poor diversification
The 3 months correlation between Canoo and Honda is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Inc and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor 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 Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Canoo i.e., Canoo and Honda go up and down completely randomly.
Pair Corralation between Canoo and Honda
Given the investment horizon of 90 days Canoo Inc is expected to under-perform the Honda. In addition to that, Canoo is 10.07 times more volatile than Honda Motor Co. It trades about -0.38 of its total potential returns per unit of risk. Honda Motor Co is currently generating about 0.03 per unit of volatility. If you would invest 2,586 in Honda Motor Co on September 14, 2024 and sell it today you would earn a total of 19.00 from holding Honda Motor Co or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canoo Inc vs. Honda Motor Co
Performance |
| Timeline |
| Canoo Inc |
| Honda Motor |
Canoo and Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canoo and Honda
The main advantage of trading using opposite Canoo and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoo position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda's long position.| Canoo vs. Lucid Group | Canoo vs. Rivian Automotive | Canoo vs. Polestar Automotive Holding | Canoo vs. Mullen Automotive |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |