Correlation Between Lion Electric and Volvo AB
Can any of the company-specific risk be diversified away by investing in both Lion Electric and Volvo AB 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 Volvo AB 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 Volvo AB ser, you can compare the effects of market volatilities on Lion Electric and Volvo AB 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 Volvo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Volvo AB.
Diversification Opportunities for Lion Electric and Volvo AB
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lion and Volvo is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Volvo AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volvo AB ser 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 Volvo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volvo AB ser has no effect on the direction of Lion Electric i.e., Lion Electric and Volvo AB go up and down completely randomly.
Pair Corralation between Lion Electric and Volvo AB
Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the Volvo AB. In addition to that, Lion Electric is 1.58 times more volatile than Volvo AB ser. It trades about -0.09 of its total potential returns per unit of risk. Volvo AB ser is currently generating about 0.04 per unit of volatility. If you would invest 1,646 in Volvo AB ser on August 30, 2024 and sell it today you would earn a total of 770.00 from holding Volvo AB ser or generate 46.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.95% |
| Values | Daily Returns |
Lion Electric Corp vs. Volvo AB ser
Performance |
| Timeline |
| Lion Electric Corp |
| Volvo AB ser |
Lion Electric and Volvo AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Electric and Volvo AB
The main advantage of trading using opposite Lion Electric and Volvo AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Electric position performs unexpectedly, Volvo AB 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 Volvo AB will offset losses from the drop in Volvo AB's long position.| Lion Electric vs. Astec Industries | Lion Electric vs. Manitex International | Lion Electric vs. Alamo Group | Lion Electric vs. Columbus McKinnon |
| Volvo AB vs. Buhler Industries | Volvo AB vs. Ag Growth International | Volvo AB vs. Grow Solutions Holdings | Volvo AB vs. American Premium Water |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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