Correlation Between Lion Electric and Blue Bird
Can any of the company-specific risk be diversified away by investing in both Lion Electric and Blue Bird 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 Blue Bird 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 Blue Bird Corp, you can compare the effects of market volatilities on Lion Electric and Blue Bird 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 Blue Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Blue Bird.
Diversification Opportunities for Lion Electric and Blue Bird
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lion and Blue is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Blue Bird Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Bird Corp 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 Blue Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Bird Corp has no effect on the direction of Lion Electric i.e., Lion Electric and Blue Bird go up and down completely randomly.
Pair Corralation between Lion Electric and Blue Bird
Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the Blue Bird. In addition to that, Lion Electric is 3.79 times more volatile than Blue Bird Corp. It trades about -0.39 of its total potential returns per unit of risk. Blue Bird Corp is currently generating about 0.03 per unit of volatility. If you would invest 4,246 in Blue Bird Corp on August 28, 2024 and sell it today you would earn a total of 37.00 from holding Blue Bird Corp or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Electric Corp vs. Blue Bird Corp
Performance |
| Timeline |
| Lion Electric Corp |
| Blue Bird Corp |
Lion Electric and Blue Bird Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and Blue Bird
The main advantage of trading using opposite Lion Electric and Blue Bird positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, Blue Bird 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 Blue Bird will offset losses from the drop in Blue Bird's long position.| Lion Electric vs. Xos Inc | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water |
| Blue Bird vs. Vicinity Motor Corp | Blue Bird vs. AYRO Inc | Blue Bird vs. Canoo Inc | Blue Bird vs. Hyzon Motors |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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