Correlation Between Canoo Holdings and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both Canoo Holdings and Lotus Technology 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 Holdings and Lotus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canoo Holdings and Lotus Technology Warrants, you can compare the effects of market volatilities on Canoo Holdings and Lotus Technology 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 Holdings with a short position of Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoo Holdings and Lotus Technology.
Diversification Opportunities for Canoo Holdings and Lotus Technology
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canoo and Lotus is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Holdings and Lotus Technology Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology Warrants and Canoo Holdings 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 Holdings are associated (or correlated) with Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology Warrants has no effect on the direction of Canoo Holdings i.e., Canoo Holdings and Lotus Technology go up and down completely randomly.
Pair Corralation between Canoo Holdings and Lotus Technology
Assuming the 90 days horizon Canoo Holdings is expected to under-perform the Lotus Technology. In addition to that, Canoo Holdings is 1.27 times more volatile than Lotus Technology Warrants. It trades about -0.14 of its total potential returns per unit of risk. Lotus Technology Warrants is currently generating about 0.01 per unit of volatility. If you would invest 27.00 in Lotus Technology Warrants on August 24, 2024 and sell it today you would lose (1.00) from holding Lotus Technology Warrants or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 60.87% |
| Values | Daily Returns |
Canoo Holdings vs. Lotus Technology Warrants
Performance |
| Timeline |
| Canoo Holdings |
| Lotus Technology Warrants |
Canoo Holdings and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canoo Holdings and Lotus Technology
The main advantage of trading using opposite Canoo Holdings and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoo Holdings position performs unexpectedly, Lotus Technology 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 Lotus Technology will offset losses from the drop in Lotus Technology's long position.| Canoo Holdings vs. EVgo Equity Warrants | Canoo Holdings vs. Canoo Inc | Canoo Holdings vs. Paysafe Ltd Wt |
| Lotus Technology vs. Kinsale Capital Group | Lotus Technology vs. Natural Alternatives International | Lotus Technology vs. Bridgford Foods | Lotus Technology vs. Employers Holdings |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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