Correlation Between Lion Electric and Buhler Industries
Can any of the company-specific risk be diversified away by investing in both Lion Electric and Buhler Industries 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 Buhler Industries 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 Buhler Industries, you can compare the effects of market volatilities on Lion Electric and Buhler Industries 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 Buhler Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Buhler Industries.
Diversification Opportunities for Lion Electric and Buhler Industries
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lion and Buhler is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Buhler Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buhler Industries 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 Buhler Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buhler Industries has no effect on the direction of Lion Electric i.e., Lion Electric and Buhler Industries go up and down completely randomly.
Pair Corralation between Lion Electric and Buhler Industries
Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the Buhler Industries. In addition to that, Lion Electric is 4.23 times more volatile than Buhler Industries. It trades about -0.08 of its total potential returns per unit of risk. Buhler Industries is currently generating about 0.04 per unit of volatility. If you would invest 150.00 in Buhler Industries on August 28, 2024 and sell it today you would earn a total of 38.00 from holding Buhler Industries or generate 25.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Electric Corp vs. Buhler Industries
Performance |
| Timeline |
| Lion Electric Corp |
| Buhler Industries |
Lion Electric and Buhler Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and Buhler Industries
The main advantage of trading using opposite Lion Electric and Buhler Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, Buhler Industries 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 Buhler Industries will offset losses from the drop in Buhler Industries' long position.| Lion Electric vs. Xos Inc | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water |
| Buhler Industries vs. Element Solutions | Buhler Industries vs. Orion Engineered Carbons | Buhler Industries vs. Minerals Technologies | Buhler Industries vs. Ingevity 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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