Correlation Between Zapp Electric and GreenPower
Can any of the company-specific risk be diversified away by investing in both Zapp Electric and GreenPower 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 Zapp Electric and GreenPower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zapp Electric Vehicles and GreenPower Motor, you can compare the effects of market volatilities on Zapp Electric and GreenPower 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 Zapp Electric with a short position of GreenPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zapp Electric and GreenPower.
Diversification Opportunities for Zapp Electric and GreenPower
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zapp and GreenPower is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Zapp Electric Vehicles and GreenPower Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenPower Motor and Zapp 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 Zapp Electric Vehicles are associated (or correlated) with GreenPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenPower Motor has no effect on the direction of Zapp Electric i.e., Zapp Electric and GreenPower go up and down completely randomly.
Pair Corralation between Zapp Electric and GreenPower
Given the investment horizon of 90 days Zapp Electric Vehicles is expected to under-perform the GreenPower. In addition to that, Zapp Electric is 2.77 times more volatile than GreenPower Motor. It trades about -0.01 of its total potential returns per unit of risk. GreenPower Motor is currently generating about 0.0 per unit of volatility. If you would invest 221.00 in GreenPower Motor on August 28, 2024 and sell it today you would lose (131.00) from holding GreenPower Motor or give up 59.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zapp Electric Vehicles vs. GreenPower Motor
Performance |
| Timeline |
| Zapp Electric Vehicles |
| GreenPower Motor |
Zapp Electric and GreenPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zapp Electric and GreenPower
The main advantage of trading using opposite Zapp Electric and GreenPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zapp Electric position performs unexpectedly, GreenPower 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 GreenPower will offset losses from the drop in GreenPower's long position.| Zapp Electric vs. Old Dominion Freight | Zapp Electric vs. Senmiao Technology | Zapp Electric vs. Weibo Corp | Zapp Electric vs. Lindblad Expeditions Holdings |
| GreenPower vs. Lion Electric Corp | GreenPower vs. Xos Inc | GreenPower vs. Hydrofarm Holdings Group | GreenPower vs. AGCO Corporation |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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