Correlation Between Pason Systems and Lion Electric
Can any of the company-specific risk be diversified away by investing in both Pason Systems and Lion Electric 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 Pason Systems and Lion Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pason Systems and Lion Electric Corp, you can compare the effects of market volatilities on Pason Systems and Lion Electric 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 Pason Systems with a short position of Lion Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pason Systems and Lion Electric.
Diversification Opportunities for Pason Systems and Lion Electric
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pason and Lion is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pason Systems and Lion Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Electric Corp and Pason Systems 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 Pason Systems are associated (or correlated) with Lion Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Electric Corp has no effect on the direction of Pason Systems i.e., Pason Systems and Lion Electric go up and down completely randomly.
Pair Corralation between Pason Systems and Lion Electric
Assuming the 90 days trading horizon Pason Systems is expected to generate 0.37 times more return on investment than Lion Electric. However, Pason Systems is 2.73 times less risky than Lion Electric. It trades about 0.04 of its potential returns per unit of risk. Lion Electric Corp is currently generating about -0.13 per unit of risk. If you would invest 1,255 in Pason Systems on August 26, 2024 and sell it today you would earn a total of 245.00 from holding Pason Systems or generate 19.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pason Systems vs. Lion Electric Corp
Performance |
| Timeline |
| Pason Systems |
| Lion Electric Corp |
Pason Systems and Lion Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pason Systems and Lion Electric
The main advantage of trading using opposite Pason Systems and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pason Systems position performs unexpectedly, Lion Electric 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 Lion Electric will offset losses from the drop in Lion Electric's long position.| Pason Systems vs. Enerflex | Pason Systems vs. Mullen Group | Pason Systems vs. Secure Energy Services | Pason Systems vs. Ensign Energy Services |
| Lion Electric vs. Lion Electric Corp | Lion Electric vs. Alimentation Couchen Tard | Lion Electric vs. BRP Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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