Correlation Between Crane and Lion Electric

Can any of the company-specific risk be diversified away by investing in both Crane 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 Crane and Lion Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crane Company and Lion Electric Corp, you can compare the effects of market volatilities on Crane 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 Crane with a short position of Lion Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Lion Electric.

Diversification Opportunities for Crane and Lion Electric

0.0

Correlation Coefficient

Crane  Lion Electric

Pay attention - limited upside

The 3 months correlation between Crane and Lion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company 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 Crane 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 Crane Company 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 Crane i.e., Crane and Lion Electric go up and down completely randomly.

Pair Corralation between Crane and Lion Electric

If you would invest  15,620  in Crane Company on December 26, 2024 and sell it today you would lose (13.00) from holding Crane Company or give up 0.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Crane Company  vs.  Lion Electric Corp

Crane Company

Risk-Adjusted Performance

Weak

Over the last 90 days Crane Company has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Crane is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Lion Electric Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lion Electric Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Lion Electric is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Crane and Lion Electric

The main advantage of trading using opposite Crane and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane 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.

The idea behind Crane Company and Lion Electric Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.