Correlation Between Lindsay and GreenPower

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

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

Diversification Opportunities for Lindsay and GreenPower

-0.48

Correlation Coefficient

Lindsay  GreenPower

Very good diversification

The 3 months correlation between Lindsay and GreenPower is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lindsay and GreenPower Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenPower Motor and Lindsay 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 Lindsay are associated (or correlated) with GreenPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenPower Motor has no effect on the direction of Lindsay i.e., Lindsay and GreenPower go up and down completely randomly.

Pair Corralation between Lindsay and GreenPower

Considering the 90-day investment horizon Lindsay is expected to generate 0.33 times more return on investment than GreenPower. However, Lindsay is 3.06 times less risky than GreenPower. It trades about 0.07 of its potential returns per unit of risk. GreenPower Motor is currently generating about -0.12 per unit of risk. If you would invest  12,006  in Lindsay on September 13, 2024 and sell it today you would earn a total of  1,092  from holding Lindsay or generate 9.1% return on investment over 90 days.

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

Lindsay  vs.  GreenPower Motor

Lindsay

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsay are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lindsay may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GreenPower Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GreenPower Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Lindsay and GreenPower

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

The idea behind Lindsay and GreenPower Motor 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.