Correlation Between GreenPower and Liquidity Services
Can any of the company-specific risk be diversified away by investing in both GreenPower and Liquidity Services 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 GreenPower and Liquidity Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenPower Motor and Liquidity Services, you can compare the effects of market volatilities on GreenPower and Liquidity Services 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 GreenPower with a short position of Liquidity Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenPower and Liquidity Services.
Diversification Opportunities for GreenPower and Liquidity Services
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GreenPower and Liquidity is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and Liquidity Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquidity Services and GreenPower 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 GreenPower Motor are associated (or correlated) with Liquidity Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquidity Services has no effect on the direction of GreenPower i.e., GreenPower and Liquidity Services go up and down completely randomly.
Pair Corralation between GreenPower and Liquidity Services
Allowing for the 90-day total investment horizon GreenPower Motor is expected to under-perform the Liquidity Services. In addition to that, GreenPower is 2.76 times more volatile than Liquidity Services. It trades about -0.03 of its total potential returns per unit of risk. Liquidity Services is currently generating about 0.08 per unit of volatility. If you would invest 1,553 in Liquidity Services on August 27, 2024 and sell it today you would earn a total of 987.00 from holding Liquidity Services or generate 63.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GreenPower Motor vs. Liquidity Services
Performance |
| Timeline |
| GreenPower Motor |
| Liquidity Services |
GreenPower and Liquidity Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GreenPower and Liquidity Services
The main advantage of trading using opposite GreenPower and Liquidity Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower position performs unexpectedly, Liquidity Services 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 Liquidity Services will offset losses from the drop in Liquidity Services' long position.| GreenPower vs. Lion Electric Corp | GreenPower vs. Xos Inc | GreenPower vs. Hydrofarm Holdings Group | GreenPower vs. AGCO Corporation |
| Liquidity Services vs. Qurate Retail Series | Liquidity Services vs. Qurate Retail | Liquidity Services vs. Dada Nexus | Liquidity Services vs. Natural Health Trend |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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