Correlation Between Lion Electric and Columbus McKinnon
Can any of the company-specific risk be diversified away by investing in both Lion Electric and Columbus McKinnon 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 Columbus McKinnon 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 Columbus McKinnon, you can compare the effects of market volatilities on Lion Electric and Columbus McKinnon 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 Columbus McKinnon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Columbus McKinnon.
Diversification Opportunities for Lion Electric and Columbus McKinnon
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lion and Columbus is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Columbus McKinnon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus McKinnon 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 Columbus McKinnon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus McKinnon has no effect on the direction of Lion Electric i.e., Lion Electric and Columbus McKinnon go up and down completely randomly.
Pair Corralation between Lion Electric and Columbus McKinnon
Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the Columbus McKinnon. In addition to that, Lion Electric is 4.44 times more volatile than Columbus McKinnon. It trades about -0.33 of its total potential returns per unit of risk. Columbus McKinnon is currently generating about 0.24 per unit of volatility. If you would invest 3,270 in Columbus McKinnon on August 24, 2024 and sell it today you would earn a total of 444.00 from holding Columbus McKinnon or generate 13.58% 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. Columbus McKinnon
Performance |
| Timeline |
| Lion Electric Corp |
| Columbus McKinnon |
Lion Electric and Columbus McKinnon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and Columbus McKinnon
The main advantage of trading using opposite Lion Electric and Columbus McKinnon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, Columbus McKinnon 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 Columbus McKinnon will offset losses from the drop in Columbus McKinnon's long position.| Lion Electric vs. Xos Inc | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water |
| Columbus McKinnon vs. Lindsay | Columbus McKinnon vs. Astec Industries | Columbus McKinnon vs. Shyft Group | Columbus McKinnon 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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