Correlation Between Lear and Hyliion Holdings
Can any of the company-specific risk be diversified away by investing in both Lear and Hyliion 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 Hyliion 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 Hyliion Holdings Corp, you can compare the effects of market volatilities on Lear and Hyliion 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 Hyliion Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lear and Hyliion Holdings.
Diversification Opportunities for Lear and Hyliion Holdings
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lear and Hyliion is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lear Corp. and Hyliion Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyliion Holdings Corp 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 Hyliion Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyliion Holdings Corp has no effect on the direction of Lear i.e., Lear and Hyliion Holdings go up and down completely randomly.
Pair Corralation between Lear and Hyliion Holdings
Considering the 90-day investment horizon Lear Corporation is expected to under-perform the Hyliion Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Lear Corporation is 3.23 times less risky than Hyliion Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The Hyliion Holdings Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 248.00 in Hyliion Holdings Corp on August 30, 2024 and sell it today you would earn a total of 123.00 from holding Hyliion Holdings Corp or generate 49.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Lear Corp. vs. Hyliion Holdings Corp
Performance |
| Timeline |
| Lear |
| Hyliion Holdings Corp |
Lear and Hyliion Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lear and Hyliion Holdings
The main advantage of trading using opposite Lear and Hyliion Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lear position performs unexpectedly, Hyliion 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 Hyliion Holdings will offset losses from the drop in Hyliion Holdings' long position.The idea behind Lear Corporation and Hyliion Holdings Corp 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.| Hyliion Holdings vs. Quantumscape Corp | Hyliion Holdings vs. Mobileye Global Class | Hyliion Holdings vs. Innoviz Technologies | Hyliion Holdings vs. Aeva Technologies |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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