Correlation Between Lightning EMotors and AGCO
Can any of the company-specific risk be diversified away by investing in both Lightning EMotors and AGCO 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 Lightning EMotors and AGCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lightning EMotors and AGCO Corporation, you can compare the effects of market volatilities on Lightning EMotors and AGCO 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 Lightning EMotors with a short position of AGCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lightning EMotors and AGCO.
Diversification Opportunities for Lightning EMotors and AGCO
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lightning and AGCO is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lightning EMotors and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO and Lightning EMotors 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 Lightning EMotors are associated (or correlated) with AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of Lightning EMotors i.e., Lightning EMotors and AGCO go up and down completely randomly.
Pair Corralation between Lightning EMotors and AGCO
Considering the 90-day investment horizon Lightning EMotors is expected to under-perform the AGCO. In addition to that, Lightning EMotors is 4.77 times more volatile than AGCO Corporation. It trades about -0.04 of its total potential returns per unit of risk. AGCO Corporation is currently generating about -0.02 per unit of volatility. If you would invest 12,550 in AGCO Corporation on August 31, 2024 and sell it today you would lose (2,404) from holding AGCO Corporation or give up 19.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 28.51% |
| Values | Daily Returns |
Lightning EMotors vs. AGCO Corp.
Performance |
| Timeline |
| Lightning EMotors |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AGCO |
Lightning EMotors and AGCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lightning EMotors and AGCO
The main advantage of trading using opposite Lightning EMotors and AGCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lightning EMotors position performs unexpectedly, AGCO 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 AGCO will offset losses from the drop in AGCO's long position.| Lightning EMotors vs. Lion Electric Corp | Lightning EMotors vs. American Premium Water | Lightning EMotors vs. Wabash National | Lightning EMotors vs. Titan International |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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