Correlation Between Westport Fuel and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both Westport Fuel and Lotus Technology 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 Westport Fuel and Lotus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westport Fuel Systems and Lotus Technology Warrants, you can compare the effects of market volatilities on Westport Fuel and Lotus Technology 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 Westport Fuel with a short position of Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and Lotus Technology.
Diversification Opportunities for Westport Fuel and Lotus Technology
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westport and Lotus is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and Lotus Technology Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology Warrants and Westport Fuel 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 Westport Fuel Systems are associated (or correlated) with Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology Warrants has no effect on the direction of Westport Fuel i.e., Westport Fuel and Lotus Technology go up and down completely randomly.
Pair Corralation between Westport Fuel and Lotus Technology
Given the investment horizon of 90 days Westport Fuel is expected to generate 2.33 times less return on investment than Lotus Technology. But when comparing it to its historical volatility, Westport Fuel Systems is 4.5 times less risky than Lotus Technology. It trades about 0.14 of its potential returns per unit of risk. Lotus Technology Warrants is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Lotus Technology Warrants on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Lotus Technology Warrants or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 61.9% |
| Values | Daily Returns |
Westport Fuel Systems vs. Lotus Technology Warrants
Performance |
| Timeline |
| Westport Fuel Systems |
| Lotus Technology Warrants |
Westport Fuel and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westport Fuel and Lotus Technology
The main advantage of trading using opposite Westport Fuel and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel position performs unexpectedly, Lotus Technology 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 Lotus Technology will offset losses from the drop in Lotus Technology's long position.| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
| Lotus Technology vs. F PD | Lotus Technology vs. China Yuchai International | Lotus Technology vs. Canoo Holdings |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |