Correlation Between Gencor Industries and Lion Electric

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

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

Diversification Opportunities for Gencor Industries and Lion Electric

-0.8

Correlation Coefficient

Gencor Industries  Lion Electric

Pay attention - limited upside

The 3 months correlation between Gencor and Lion is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gencor Industries 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 Gencor Industries 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 Gencor Industries 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 Gencor Industries i.e., Gencor Industries and Lion Electric go up and down completely randomly.

Pair Corralation between Gencor Industries and Lion Electric

Given the investment horizon of 90 days Gencor Industries is expected to generate 0.27 times more return on investment than Lion Electric. However, Gencor Industries is 3.65 times less risky than Lion Electric. It trades about 0.11 of its potential returns per unit of risk. Lion Electric Corp is currently generating about -0.26 per unit of risk. If you would invest  1,946  in Gencor Industries on September 1, 2024 and sell it today you would earn a total of  273.00  from holding Gencor Industries or generate 14.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Gencor Industries  vs.  Lion Electric Corp

Gencor Industries

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gencor Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Gencor Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lion Electric Corp

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Gencor Industries and Lion Electric

The main advantage of trading using opposite Gencor Industries and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gencor Industries 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 Gencor Industries 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.