Correlation Between Lear and ECARX Holdings
Can any of the company-specific risk be diversified away by investing in both Lear and ECARX Holdings 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 Lear and ECARX Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lear Corporation and ECARX Holdings Warrants, you can compare the effects of market volatilities on Lear and ECARX Holdings 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 Lear with a short position of ECARX Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lear and ECARX Holdings.
Diversification Opportunities for Lear and ECARX Holdings
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lear and ECARX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lear Corp. and ECARX Holdings Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECARX Holdings Warrants and Lear 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 Lear Corporation are associated (or correlated) with ECARX Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECARX Holdings Warrants has no effect on the direction of Lear i.e., Lear and ECARX Holdings go up and down completely randomly.
Pair Corralation between Lear and ECARX Holdings
Considering the 90-day investment horizon Lear Corporation is expected to under-perform the ECARX Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Lear Corporation is 69.48 times less risky than ECARX Holdings. The stock trades about -0.05 of its potential returns per unit of risk. The ECARX Holdings Warrants is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8.16 in ECARX Holdings Warrants on September 2, 2024 and sell it today you would lose (5.67) from holding ECARX Holdings Warrants or give up 69.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 61.56% |
| Values | Daily Returns |
Lear Corp. vs. ECARX Holdings Warrants
Performance |
| Timeline |
| Lear |
| ECARX Holdings Warrants |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Lear and ECARX Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lear and ECARX Holdings
The main advantage of trading using opposite Lear and ECARX Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lear position performs unexpectedly, ECARX Holdings 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 ECARX Holdings will offset losses from the drop in ECARX Holdings' long position.The idea behind Lear Corporation and ECARX Holdings Warrants pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ECARX Holdings vs. ECARX Holdings Class | ECARX Holdings vs. Bridger Aerospace Group | ECARX Holdings vs. NewAmsterdam Pharma | ECARX Holdings vs. Gorilla Technology Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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