Correlation Between GreenPower and Vicinity
Can any of the company-specific risk be diversified away by investing in both GreenPower and Vicinity 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 Vicinity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenPower Motor and Vicinity Motor Corp, you can compare the effects of market volatilities on GreenPower and Vicinity 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 Vicinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenPower and Vicinity.
Diversification Opportunities for GreenPower and Vicinity
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GreenPower and Vicinity is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and Vicinity Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Motor Corp 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 Vicinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Motor Corp has no effect on the direction of GreenPower i.e., GreenPower and Vicinity go up and down completely randomly.
Pair Corralation between GreenPower and Vicinity
Assuming the 90 days horizon GreenPower Motor is expected to generate 0.38 times more return on investment than Vicinity. However, GreenPower Motor is 2.61 times less risky than Vicinity. It trades about 0.06 of its potential returns per unit of risk. Vicinity Motor Corp is currently generating about -0.19 per unit of risk. If you would invest 123.00 in GreenPower Motor on September 2, 2024 and sell it today you would earn a total of 17.00 from holding GreenPower Motor or generate 13.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GreenPower Motor vs. Vicinity Motor Corp
Performance |
| Timeline |
| GreenPower Motor |
| Vicinity Motor Corp |
GreenPower and Vicinity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GreenPower and Vicinity
The main advantage of trading using opposite GreenPower and Vicinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower position performs unexpectedly, Vicinity 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 Vicinity will offset losses from the drop in Vicinity's long position.| GreenPower vs. NFI Group | GreenPower vs. Docebo Inc | GreenPower vs. WELL Health Technologies | GreenPower vs. Dye Durham |
| Vicinity vs. Blue Bird Corp | Vicinity vs. AYRO Inc | Vicinity vs. BAIC Motor | Vicinity vs. Zapp Electric Vehicles |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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