Correlation Between Lion Electric and Guru Organic
Can any of the company-specific risk be diversified away by investing in both Lion Electric and Guru Organic 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 Guru Organic 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 Guru Organic Energy, you can compare the effects of market volatilities on Lion Electric and Guru Organic 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 Guru Organic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Guru Organic.
Diversification Opportunities for Lion Electric and Guru Organic
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lion and Guru is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Guru Organic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guru Organic Energy 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 Guru Organic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guru Organic Energy has no effect on the direction of Lion Electric i.e., Lion Electric and Guru Organic go up and down completely randomly.
Pair Corralation between Lion Electric and Guru Organic
Assuming the 90 days trading horizon Lion Electric Corp is expected to under-perform the Guru Organic. In addition to that, Lion Electric is 1.09 times more volatile than Guru Organic Energy. It trades about -0.09 of its total potential returns per unit of risk. Guru Organic Energy is currently generating about 0.0 per unit of volatility. If you would invest 272.00 in Guru Organic Energy on August 29, 2024 and sell it today you would lose (80.00) from holding Guru Organic Energy or give up 29.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Electric Corp vs. Guru Organic Energy
Performance |
| Timeline |
| Lion Electric Corp |
| Guru Organic Energy |
Lion Electric and Guru Organic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and Guru Organic
The main advantage of trading using opposite Lion Electric and Guru Organic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, Guru Organic 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 Guru Organic will offset losses from the drop in Guru Organic'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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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