Correlation Between Lion Electric and Bombardier
Can any of the company-specific risk be diversified away by investing in both Lion Electric and Bombardier 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 Bombardier 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 Bombardier, you can compare the effects of market volatilities on Lion Electric and Bombardier 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 Bombardier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Bombardier.
Diversification Opportunities for Lion Electric and Bombardier
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and Bombardier is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Bombardier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombardier 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 Bombardier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombardier has no effect on the direction of Lion Electric i.e., Lion Electric and Bombardier go up and down completely randomly.
Pair Corralation between Lion Electric and Bombardier
Assuming the 90 days trading horizon Lion Electric Corp is expected to under-perform the Bombardier. In addition to that, Lion Electric is 1.51 times more volatile than Bombardier. It trades about -0.1 of its total potential returns per unit of risk. Bombardier is currently generating about 0.06 per unit of volatility. If you would invest 5,177 in Bombardier on August 26, 2024 and sell it today you would earn a total of 5,188 from holding Bombardier or generate 100.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Electric Corp vs. Bombardier
Performance |
| Timeline |
| Lion Electric Corp |
| Bombardier |
Lion Electric and Bombardier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and Bombardier
The main advantage of trading using opposite Lion Electric and Bombardier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, Bombardier 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 Bombardier will offset losses from the drop in Bombardier's long position.| Lion Electric vs. Lion Electric Corp | Lion Electric vs. Alimentation Couchen Tard | Lion Electric vs. BRP Inc |
| Bombardier vs. BlackBerry | Bombardier vs. Air Canada | Bombardier vs. Suncor Energy | Bombardier vs. Manulife Financial Corp |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |