Correlation Between Lion Electric and PACCAR
Can any of the company-specific risk be diversified away by investing in both Lion Electric and PACCAR 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 PACCAR 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 PACCAR Inc, you can compare the effects of market volatilities on Lion Electric and PACCAR 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 PACCAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and PACCAR.
Diversification Opportunities for Lion Electric and PACCAR
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lion and PACCAR is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc 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 PACCAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACCAR Inc has no effect on the direction of Lion Electric i.e., Lion Electric and PACCAR go up and down completely randomly.
Pair Corralation between Lion Electric and PACCAR
Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the PACCAR. In addition to that, Lion Electric is 3.35 times more volatile than PACCAR Inc. It trades about -0.12 of its total potential returns per unit of risk. PACCAR Inc is currently generating about 0.07 per unit of volatility. If you would invest 8,784 in PACCAR Inc on August 26, 2024 and sell it today you would earn a total of 2,691 from holding PACCAR Inc or generate 30.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Electric Corp vs. PACCAR Inc
Performance |
| Timeline |
| Lion Electric Corp |
| PACCAR Inc |
Lion Electric and PACCAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and PACCAR
The main advantage of trading using opposite Lion Electric and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, PACCAR 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 PACCAR will offset losses from the drop in PACCAR's long position.| Lion Electric vs. Xos Inc | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water |
| PACCAR vs. Lion Electric Corp | PACCAR vs. Xos Inc | PACCAR vs. Hydrofarm Holdings Group | PACCAR 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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