Correlation Between Lion Electric and Oshkosh
Can any of the company-specific risk be diversified away by investing in both Lion Electric and Oshkosh 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 Oshkosh 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 Oshkosh, you can compare the effects of market volatilities on Lion Electric and Oshkosh 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 Oshkosh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Oshkosh.
Diversification Opportunities for Lion Electric and Oshkosh
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lion and Oshkosh is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Oshkosh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshkosh 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 Oshkosh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oshkosh has no effect on the direction of Lion Electric i.e., Lion Electric and Oshkosh go up and down completely randomly.
Pair Corralation between Lion Electric and Oshkosh
Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the Oshkosh. In addition to that, Lion Electric is 4.26 times more volatile than Oshkosh. It trades about -0.38 of its total potential returns per unit of risk. Oshkosh is currently generating about 0.12 per unit of volatility. If you would invest 10,602 in Oshkosh on August 31, 2024 and sell it today you would earn a total of 675.00 from holding Oshkosh or generate 6.37% 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. Oshkosh
Performance |
| Timeline |
| Lion Electric Corp |
| Oshkosh |
Lion Electric and Oshkosh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and Oshkosh
The main advantage of trading using opposite Lion Electric and Oshkosh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, Oshkosh 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 Oshkosh will offset losses from the drop in Oshkosh's long position.| Lion Electric vs. Xos Inc | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water |
| Oshkosh vs. Terex | Oshkosh vs. Astec Industries | Oshkosh vs. Hyster Yale Materials Handling | Oshkosh vs. Manitex International |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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