Correlation Between Lion Electric and Trend Micro
Can any of the company-specific risk be diversified away by investing in both Lion Electric and Trend Micro 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 Trend Micro 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 Trend Micro ADR, you can compare the effects of market volatilities on Lion Electric and Trend Micro 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 Trend Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Trend Micro.
Diversification Opportunities for Lion Electric and Trend Micro
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and Trend is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Trend Micro ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trend Micro ADR 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 Trend Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trend Micro ADR has no effect on the direction of Lion Electric i.e., Lion Electric and Trend Micro go up and down completely randomly.
Pair Corralation between Lion Electric and Trend Micro
Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the Trend Micro. In addition to that, Lion Electric is 2.67 times more volatile than Trend Micro ADR. It trades about -0.04 of its total potential returns per unit of risk. Trend Micro ADR is currently generating about 0.03 per unit of volatility. If you would invest 4,690 in Trend Micro ADR on September 14, 2024 and sell it today you would earn a total of 843.00 from holding Trend Micro ADR or generate 17.97% 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. Trend Micro ADR
Performance |
| Timeline |
| Lion Electric Corp |
| Trend Micro ADR |
Lion Electric and Trend Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and Trend Micro
The main advantage of trading using opposite Lion Electric and Trend Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, Trend Micro 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 Trend Micro will offset losses from the drop in Trend Micro's long position.| Lion Electric vs. Xos Inc | Lion Electric vs. Ideanomics | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National |
| Trend Micro vs. Secureworks Corp | Trend Micro vs. Synchronoss Technologies | Trend Micro vs. SolarWinds Corp | Trend Micro vs. Evertec |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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