Correlation Between Lion Electric and AGCO
Can any of the company-specific risk be diversified away by investing in both Lion Electric and AGCO 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 AGCO 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 AGCO Corporation, you can compare the effects of market volatilities on Lion Electric and AGCO 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 AGCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and AGCO.
Diversification Opportunities for Lion Electric and AGCO
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and AGCO is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO 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 AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of Lion Electric i.e., Lion Electric and AGCO go up and down completely randomly.
Pair Corralation between Lion Electric and AGCO
Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the AGCO. In addition to that, Lion Electric is 4.0 times more volatile than AGCO Corporation. It trades about -0.4 of its total potential returns per unit of risk. AGCO Corporation is currently generating about -0.02 per unit of volatility. If you would invest 10,157 in AGCO Corporation on August 29, 2024 and sell it today you would lose (218.00) from holding AGCO Corporation or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Electric Corp vs. AGCO Corp.
Performance |
| Timeline |
| Lion Electric Corp |
| AGCO |
Lion Electric and AGCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and AGCO
The main advantage of trading using opposite Lion Electric and AGCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, AGCO 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 AGCO will offset losses from the drop in AGCO's long position.| Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water | Lion Electric vs. Titan International |
| AGCO vs. MYR Group | AGCO vs. Granite Construction Incorporated | AGCO vs. Construction Partners | AGCO vs. Great Lakes Dredge |
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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