Correlation Between Lion Electric and Air Canada
Can any of the company-specific risk be diversified away by investing in both Lion Electric and Air Canada 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 Lion Electric and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Electric Corp and Air Canada, you can compare the effects of market volatilities on Lion Electric and Air Canada 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 Lion Electric with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Air Canada.
Diversification Opportunities for Lion Electric and Air Canada
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lion and Air is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and Lion Electric 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 Lion Electric Corp are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Lion Electric i.e., Lion Electric and Air Canada go up and down completely randomly.
Pair Corralation between Lion Electric and Air Canada
Assuming the 90 days trading horizon Lion Electric Corp is expected to under-perform the Air Canada. In addition to that, Lion Electric is 2.82 times more volatile than Air Canada. It trades about -0.18 of its total potential returns per unit of risk. Air Canada is currently generating about 0.12 per unit of volatility. If you would invest 1,820 in Air Canada on August 29, 2024 and sell it today you would earn a total of 643.00 from holding Air Canada or generate 35.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Electric Corp vs. Air Canada
Performance |
| Timeline |
| Lion Electric Corp |
| Air Canada |
Lion Electric and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and Air Canada
The main advantage of trading using opposite Lion Electric and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| Lion Electric vs. Lion Electric Corp | Lion Electric vs. Alimentation Couchen Tard | Lion Electric vs. BRP Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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