Correlation Between Lion Electric and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Lion Electric and CNH Industrial 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 CNH Industrial 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 CNH Industrial NV, you can compare the effects of market volatilities on Lion Electric and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and CNH Industrial.
Diversification Opportunities for Lion Electric and CNH Industrial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lion and CNH is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Lion Electric i.e., Lion Electric and CNH Industrial go up and down completely randomly.
Pair Corralation between Lion Electric and CNH Industrial
If you would invest 1,145 in CNH Industrial NV on August 28, 2024 and sell it today you would earn a total of 0.00 from holding CNH Industrial NV or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 1.59% |
| Values | Daily Returns |
Lion Electric Corp vs. CNH Industrial NV
Performance |
| Timeline |
| Lion Electric Corp |
| CNH Industrial NV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lion Electric and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and CNH Industrial
The main advantage of trading using opposite Lion Electric and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| Lion Electric vs. Xos Inc | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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