Correlation Between Lion Electric and GreenPower
Can any of the company-specific risk be diversified away by investing in both Lion Electric and GreenPower 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 GreenPower 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 GreenPower Motor, you can compare the effects of market volatilities on Lion Electric and GreenPower 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 GreenPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and GreenPower.
Diversification Opportunities for Lion Electric and GreenPower
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and GreenPower is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and GreenPower Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenPower Motor 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 GreenPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenPower Motor has no effect on the direction of Lion Electric i.e., Lion Electric and GreenPower go up and down completely randomly.
Pair Corralation between Lion Electric and GreenPower
Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the GreenPower. In addition to that, Lion Electric is 2.55 times more volatile than GreenPower Motor. It trades about -0.38 of its total potential returns per unit of risk. GreenPower Motor is currently generating about 0.02 per unit of volatility. If you would invest 101.00 in GreenPower Motor on August 31, 2024 and sell it today you would earn a total of 0.00 from holding GreenPower Motor or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Electric Corp vs. GreenPower Motor
Performance |
| Timeline |
| Lion Electric Corp |
| GreenPower Motor |
Lion Electric and GreenPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and GreenPower
The main advantage of trading using opposite Lion Electric and GreenPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, GreenPower 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 GreenPower will offset losses from the drop in GreenPower's long position.| Lion Electric vs. Xos Inc | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water |
| GreenPower vs. Phoenix Motor Common | GreenPower vs. Envirotech Vehicles | GreenPower vs. Volcon Inc | GreenPower vs. Zapp Electric Vehicles |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |