Correlation Between Rubicon Organics and Lion Electric

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

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

Diversification Opportunities for Rubicon Organics and Lion Electric

0.69

Correlation Coefficient

Rubicon Organics  Lion Electric

Poor diversification

The 3 months correlation between Rubicon and Lion is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and Lion Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Electric Corp and Rubicon Organics 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 Rubicon Organics are associated (or correlated) with Lion Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Electric Corp has no effect on the direction of Rubicon Organics i.e., Rubicon Organics and Lion Electric go up and down completely randomly.

Pair Corralation between Rubicon Organics and Lion Electric

Assuming the 90 days trading horizon Rubicon Organics is expected to generate 2.15 times less return on investment than Lion Electric. But when comparing it to its historical volatility, Rubicon Organics is 2.41 times less risky than Lion Electric. It trades about 0.15 of its potential returns per unit of risk. Lion Electric Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Lion Electric Corp on September 21, 2024 and sell it today you would earn a total of  8.00  from holding Lion Electric Corp or generate 29.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Rubicon Organics  vs.  Lion Electric Corp

Rubicon Organics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Rubicon Organics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 weak 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.

Pair Trading with Rubicon Organics and Lion Electric

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

The idea behind Rubicon Organics and Lion Electric Corp 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.