Correlation Between Lion Electric and ZEN Graphene
Can any of the company-specific risk be diversified away by investing in both Lion Electric and ZEN Graphene 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 ZEN Graphene 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 ZEN Graphene Solutions, you can compare the effects of market volatilities on Lion Electric and ZEN Graphene 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 ZEN Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and ZEN Graphene.
Diversification Opportunities for Lion Electric and ZEN Graphene
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lion and ZEN is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and ZEN Graphene Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEN Graphene Solutions 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 ZEN Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEN Graphene Solutions has no effect on the direction of Lion Electric i.e., Lion Electric and ZEN Graphene go up and down completely randomly.
Pair Corralation between Lion Electric and ZEN Graphene
Assuming the 90 days trading horizon Lion Electric Corp is expected to under-perform the ZEN Graphene. In addition to that, Lion Electric is 1.29 times more volatile than ZEN Graphene Solutions. It trades about -0.05 of its total potential returns per unit of risk. ZEN Graphene Solutions is currently generating about 0.0 per unit of volatility. If you would invest 235.00 in ZEN Graphene Solutions on September 4, 2024 and sell it today you would lose (81.00) from holding ZEN Graphene Solutions or give up 34.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Electric Corp vs. ZEN Graphene Solutions
Performance |
| Timeline |
| Lion Electric Corp |
| ZEN Graphene Solutions |
Lion Electric and ZEN Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and ZEN Graphene
The main advantage of trading using opposite Lion Electric and ZEN Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, ZEN Graphene 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 ZEN Graphene will offset losses from the drop in ZEN Graphene's long position.| Lion Electric vs. Lion Electric Corp | Lion Electric vs. Alimentation Couchen Tard | Lion Electric vs. BRP Inc |
| ZEN Graphene vs. American Manganese | ZEN Graphene vs. Frontier Lithium | ZEN Graphene vs. Graphene Manufacturing Group | ZEN Graphene vs. Northern Graphite |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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