Correlation Between Lion Electric and Red Branch
Can any of the company-specific risk be diversified away by investing in both Lion Electric and Red Branch 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 Red Branch 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 Red Branch Technologies, you can compare the effects of market volatilities on Lion Electric and Red Branch 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 Red Branch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Red Branch.
Diversification Opportunities for Lion Electric and Red Branch
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lion and Red is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Red Branch Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Branch Technologies 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 Red Branch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Branch Technologies has no effect on the direction of Lion Electric i.e., Lion Electric and Red Branch go up and down completely randomly.
Pair Corralation between Lion Electric and Red Branch
Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the Red Branch. But the stock apears to be less risky and, when comparing its historical volatility, Lion Electric Corp is 7.99 times less risky than Red Branch. The stock trades about -0.04 of its potential returns per unit of risk. The Red Branch Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Red Branch Technologies on September 12, 2024 and sell it today you would earn a total of 0.01 from holding Red Branch Technologies or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Electric Corp vs. Red Branch Technologies
Performance |
| Timeline |
| Lion Electric Corp |
| Red Branch Technologies |
Lion Electric and Red Branch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and Red Branch
The main advantage of trading using opposite Lion Electric and Red Branch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, Red Branch 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 Red Branch will offset losses from the drop in Red Branch's long position.| Lion Electric vs. Manitowoc | Lion Electric vs. Wabash National | Lion Electric vs. Alamo Group | Lion Electric vs. AGCO Corporation |
| Red Branch vs. Deere Company | Red Branch vs. Caterpillar | Red Branch vs. Lion Electric Corp | Red Branch vs. Nikola Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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