Correlation Between Canoo and Fly E

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

By analyzing existing cross correlation between Canoo Inc and Fly E Group, Common, you can compare the effects of market volatilities on Canoo and Fly E 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 Canoo with a short position of Fly E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoo and Fly E.

Diversification Opportunities for Canoo and Fly E

0.45

Correlation Coefficient

Canoo  Fly E

Very weak diversification

The 3 months correlation between Canoo and Fly is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Inc and Fly E Group, Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fly E Group, and Canoo 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 Canoo Inc are associated (or correlated) with Fly E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fly E Group, has no effect on the direction of Canoo i.e., Canoo and Fly E go up and down completely randomly.

Pair Corralation between Canoo and Fly E

Given the investment horizon of 90 days Canoo Inc is expected to under-perform the Fly E. In addition to that, Canoo is 1.17 times more volatile than Fly E Group, Common. It trades about -0.35 of its total potential returns per unit of risk. Fly E Group, Common is currently generating about 0.23 per unit of volatility. If you would invest  45.00  in Fly E Group, Common on October 9, 2024 and sell it today you would earn a total of  26.00  from holding Fly E Group, Common or generate 57.78% return on investment over 90 days.

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

Canoo Inc  vs.  Fly E Group, Common

Canoo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canoo Inc 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Fly E Group,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fly E Group, Common are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Fly E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canoo and Fly E

The main advantage of trading using opposite Canoo and Fly E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoo position performs unexpectedly, Fly E 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 Fly E will offset losses from the drop in Fly E's long position.

The idea behind Canoo Inc and Fly E Group, Common 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.