Correlation Between Kubota and Lion Electric
Can any of the company-specific risk be diversified away by investing in both Kubota and Lion Electric 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 Kubota and Lion Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kubota and Lion Electric Corp, you can compare the effects of market volatilities on Kubota and Lion Electric 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 Kubota with a short position of Lion Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kubota and Lion Electric.
Diversification Opportunities for Kubota and Lion Electric
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kubota and Lion is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kubota and Lion Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Electric Corp and Kubota 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 Kubota are associated (or correlated) with Lion Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Electric Corp has no effect on the direction of Kubota i.e., Kubota and Lion Electric go up and down completely randomly.
Pair Corralation between Kubota and Lion Electric
Assuming the 90 days horizon Kubota is expected to generate 0.22 times more return on investment than Lion Electric. However, Kubota is 4.58 times less risky than Lion Electric. It trades about -0.12 of its potential returns per unit of risk. Lion Electric Corp is currently generating about -0.2 per unit of risk. If you would invest 1,450 in Kubota on August 28, 2024 and sell it today you would lose (192.00) from holding Kubota or give up 13.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kubota vs. Lion Electric Corp
Performance |
| Timeline |
| Kubota |
| Lion Electric Corp |
Kubota and Lion Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kubota and Lion Electric
The main advantage of trading using opposite Kubota and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kubota position performs unexpectedly, Lion Electric 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 Lion Electric will offset losses from the drop in Lion Electric's long position.| Kubota vs. Lion Electric Corp | Kubota vs. Nikola Corp | Kubota vs. Buhler Industries | Kubota vs. Toyota Industries |
| Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water | Lion Electric vs. Titan International |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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