Correlation Between Life Electric and EZGO Technologies
Can any of the company-specific risk be diversified away by investing in both Life Electric and EZGO Technologies 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 Life Electric and EZGO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Electric Vehicles and EZGO Technologies, you can compare the effects of market volatilities on Life Electric and EZGO Technologies 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 Life Electric with a short position of EZGO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Electric and EZGO Technologies.
Diversification Opportunities for Life Electric and EZGO Technologies
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Life and EZGO is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Life Electric Vehicles and EZGO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZGO Technologies and Life 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 Life Electric Vehicles are associated (or correlated) with EZGO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZGO Technologies has no effect on the direction of Life Electric i.e., Life Electric and EZGO Technologies go up and down completely randomly.
Pair Corralation between Life Electric and EZGO Technologies
Given the investment horizon of 90 days Life Electric Vehicles is expected to under-perform the EZGO Technologies. In addition to that, Life Electric is 4.17 times more volatile than EZGO Technologies. It trades about -0.29 of its total potential returns per unit of risk. EZGO Technologies is currently generating about 0.07 per unit of volatility. If you would invest 47.00 in EZGO Technologies on November 29, 2024 and sell it today you would earn a total of 2.01 from holding EZGO Technologies or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Life Electric Vehicles vs. EZGO Technologies
Performance |
| Timeline |
| Life Electric Vehicles |
| EZGO Technologies |
Life Electric and EZGO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Electric and EZGO Technologies
The main advantage of trading using opposite Life Electric and EZGO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Electric position performs unexpectedly, EZGO Technologies 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 EZGO Technologies will offset losses from the drop in EZGO Technologies' long position.| Life Electric vs. Curtiss Motorcycles | Life Electric vs. Evil Empire Designs | Life Electric vs. EZGO Technologies | Life Electric vs. Marine Products |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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