Correlation Between Lion Electric and Alamo
Can any of the company-specific risk be diversified away by investing in both Lion Electric and Alamo 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 Alamo 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 Alamo Group, you can compare the effects of market volatilities on Lion Electric and Alamo 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 Alamo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Alamo.
Diversification Opportunities for Lion Electric and Alamo
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lion and Alamo is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Group 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 Alamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Group has no effect on the direction of Lion Electric i.e., Lion Electric and Alamo go up and down completely randomly.
Pair Corralation between Lion Electric and Alamo
Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the Alamo. In addition to that, Lion Electric is 2.53 times more volatile than Alamo Group. It trades about -0.08 of its total potential returns per unit of risk. Alamo Group is currently generating about 0.04 per unit of volatility. If you would invest 14,552 in Alamo Group on August 27, 2024 and sell it today you would earn a total of 5,258 from holding Alamo Group or generate 36.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Electric Corp vs. Alamo Group
Performance |
| Timeline |
| Lion Electric Corp |
| Alamo Group |
Lion Electric and Alamo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and Alamo
The main advantage of trading using opposite Lion Electric and Alamo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, Alamo 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 Alamo will offset losses from the drop in Alamo's long position.| Lion Electric vs. Xos Inc | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water |
| Alamo vs. Lion Electric Corp | Alamo vs. Xos Inc | Alamo vs. Hydrofarm Holdings Group | Alamo vs. AGCO Corporation |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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