Correlation Between Canoo and Workhorse
Can any of the company-specific risk be diversified away by investing in both Canoo and Workhorse 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 Workhorse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canoo Inc and Workhorse Group, you can compare the effects of market volatilities on Canoo and Workhorse 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 Workhorse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoo and Workhorse.
Diversification Opportunities for Canoo and Workhorse
Excellent diversification
The 3 months correlation between Canoo and Workhorse is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Inc and Workhorse Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workhorse Group 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 Workhorse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workhorse Group has no effect on the direction of Canoo i.e., Canoo and Workhorse go up and down completely randomly.
Pair Corralation between Canoo and Workhorse
Given the investment horizon of 90 days Canoo Inc is expected to under-perform the Workhorse. But the stock apears to be less risky and, when comparing its historical volatility, Canoo Inc is 1.14 times less risky than Workhorse. The stock trades about -0.13 of its potential returns per unit of risk. The Workhorse Group is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 421.00 in Workhorse Group on August 24, 2024 and sell it today you would lose (325.00) from holding Workhorse Group or give up 77.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canoo Inc vs. Workhorse Group
Performance |
| Timeline |
| Canoo Inc |
| Workhorse Group |
Canoo and Workhorse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canoo and Workhorse
The main advantage of trading using opposite Canoo and Workhorse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoo position performs unexpectedly, Workhorse 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 Workhorse will offset losses from the drop in Workhorse's long position.| Canoo vs. Lucid Group | Canoo vs. Rivian Automotive | Canoo vs. Polestar Automotive Holding | Canoo vs. Mullen Automotive |
| Workhorse vs. Faraday Future Intelligent | Workhorse vs. Mullen Automotive | Workhorse vs. Xpeng Inc | Workhorse vs. Nio Class A |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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