Correlation Between Lion Electric and Exchange Income

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

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

Diversification Opportunities for Lion Electric and Exchange Income

-0.73

Correlation Coefficient

Lion Electric  Exchange Income

Pay attention - limited upside

The 3 months correlation between Lion and Exchange is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Exchange Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Income and Lion Electric 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 Lion Electric Corp are associated (or correlated) with Exchange Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Income has no effect on the direction of Lion Electric i.e., Lion Electric and Exchange Income go up and down completely randomly.

Pair Corralation between Lion Electric and Exchange Income

Assuming the 90 days trading horizon Lion Electric Corp is expected to under-perform the Exchange Income. In addition to that, Lion Electric is 4.25 times more volatile than Exchange Income. It trades about -0.05 of its total potential returns per unit of risk. Exchange Income is currently generating about 0.04 per unit of volatility. If you would invest  4,742  in Exchange Income on September 25, 2024 and sell it today you would earn a total of  1,034  from holding Exchange Income or generate 21.81% return on investment over 90 days.

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

Lion Electric Corp  vs.  Exchange Income

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Exchange Income

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exchange Income are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Exchange Income displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion Electric and Exchange Income

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

The idea behind Lion Electric Corp and Exchange Income 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.