Correlation Between Canoo Holdings and Bell Copper

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

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

Diversification Opportunities for Canoo Holdings and Bell Copper

0.63

Correlation Coefficient

Canoo Holdings  Bell Copper

Poor diversification

The 3 months correlation between Canoo and Bell is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Holdings and Bell Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Copper and Canoo Holdings 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 Holdings are associated (or correlated) with Bell Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Copper has no effect on the direction of Canoo Holdings i.e., Canoo Holdings and Bell Copper go up and down completely randomly.

Pair Corralation between Canoo Holdings and Bell Copper

Assuming the 90 days horizon Canoo Holdings is expected to generate 2.5 times less return on investment than Bell Copper. In addition to that, Canoo Holdings is 1.01 times more volatile than Bell Copper. It trades about 0.01 of its total potential returns per unit of risk. Bell Copper is currently generating about 0.03 per unit of volatility. If you would invest  9.50  in Bell Copper on September 20, 2024 and sell it today you would lose (7.00) from holding Bell Copper or give up 73.68% of portfolio value over 90 days.

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

Canoo Holdings  vs.  Bell Copper

Canoo Holdings

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canoo Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Canoo Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Bell Copper

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bell Copper are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Bell Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canoo Holdings and Bell Copper

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

The idea behind Canoo Holdings and Bell Copper 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.