Correlation Between Canoo and Volcon

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

By analyzing existing cross correlation between Canoo Inc and Volcon Inc, you can compare the effects of market volatilities on Canoo and Volcon 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 Volcon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoo and Volcon.

Diversification Opportunities for Canoo and Volcon

-0.5

Correlation Coefficient

Canoo  Volcon

Very good diversification

The 3 months correlation between Canoo and Volcon is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Inc and Volcon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volcon Inc 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 Volcon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volcon Inc has no effect on the direction of Canoo i.e., Canoo and Volcon go up and down completely randomly.

Pair Corralation between Canoo and Volcon

Given the investment horizon of 90 days Canoo Inc is expected to under-perform the Volcon. In addition to that, Canoo is 3.13 times more volatile than Volcon Inc. It trades about -0.19 of its total potential returns per unit of risk. Volcon Inc is currently generating about -0.27 per unit of volatility. If you would invest  436.00  in Volcon Inc on December 28, 2024 and sell it today you would lose (340.00) from holding Volcon Inc or give up 77.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	37.7%
Values	Daily Returns

Canoo Inc  vs.  Volcon Inc

Canoo Inc

Risk-Adjusted Performance

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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Volcon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volcon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Canoo and Volcon

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

The idea behind Canoo Inc and Volcon Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.