Correlation Between Vicinity and Canoo
Can any of the company-specific risk be diversified away by investing in both Vicinity and Canoo 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 Vicinity and Canoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vicinity Motor Corp and Canoo Inc, you can compare the effects of market volatilities on Vicinity and Canoo 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 Vicinity with a short position of Canoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vicinity and Canoo.
Diversification Opportunities for Vicinity and Canoo
Very poor diversification
The 3 months correlation between Vicinity and Canoo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Motor Corp and Canoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoo Inc and Vicinity 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 Vicinity Motor Corp are associated (or correlated) with Canoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoo Inc has no effect on the direction of Vicinity i.e., Vicinity and Canoo go up and down completely randomly.
Pair Corralation between Vicinity and Canoo
Considering the 90-day investment horizon Vicinity Motor Corp is expected to generate 1.45 times more return on investment than Canoo. However, Vicinity is 1.45 times more volatile than Canoo Inc. It trades about -0.05 of its potential returns per unit of risk. Canoo Inc is currently generating about -0.07 per unit of risk. If you would invest 100.00 in Vicinity Motor Corp on August 31, 2024 and sell it today you would lose (99.79) from holding Vicinity Motor Corp or give up 99.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Vicinity Motor Corp vs. Canoo Inc
Performance |
| Timeline |
| Vicinity Motor Corp |
| Canoo Inc |
Vicinity and Canoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vicinity and Canoo
The main advantage of trading using opposite Vicinity and Canoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vicinity position performs unexpectedly, Canoo 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 Canoo will offset losses from the drop in Canoo's long position.| Vicinity vs. Blue Bird Corp | Vicinity vs. AYRO Inc | Vicinity vs. BAIC Motor | Vicinity vs. Zapp Electric Vehicles |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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