Correlation Between Canoo Holdings and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both Canoo Holdings and Lucara Diamond 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 Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canoo Holdings and Lucara Diamond Corp, you can compare the effects of market volatilities on Canoo Holdings and Lucara Diamond 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 Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoo Holdings and Lucara Diamond.
Diversification Opportunities for Canoo Holdings and Lucara Diamond
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canoo and Lucara is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Holdings and Lucara Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucara Diamond Corp 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 Lucara Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucara Diamond Corp has no effect on the direction of Canoo Holdings i.e., Canoo Holdings and Lucara Diamond go up and down completely randomly.
Pair Corralation between Canoo Holdings and Lucara Diamond
Assuming the 90 days horizon Canoo Holdings is expected to generate 2.03 times more return on investment than Lucara Diamond. However, Canoo Holdings is 2.03 times more volatile than Lucara Diamond Corp. It trades about 0.01 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about -0.04 per unit of risk. If you would invest 2.12 in Canoo Holdings on September 3, 2024 and sell it today you would lose (0.12) from holding Canoo Holdings or give up 5.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canoo Holdings vs. Lucara Diamond Corp
Performance |
| Timeline |
| Canoo Holdings |
| Lucara Diamond Corp |
Canoo Holdings and Lucara Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canoo Holdings and Lucara Diamond
The main advantage of trading using opposite Canoo Holdings and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoo Holdings position performs unexpectedly, Lucara Diamond 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 Lucara Diamond will offset losses from the drop in Lucara Diamond's long position.| Canoo Holdings vs. EVgo Equity Warrants | Canoo Holdings vs. Canoo Inc | Canoo Holdings vs. Paysafe Ltd Wt |
| Lucara Diamond vs. Advantage Solutions | Lucara Diamond vs. Atlas Corp | Lucara Diamond vs. PureCycle Technologies | Lucara Diamond vs. WM Technology |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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