Correlation Between Workhorse and Volcon

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

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

Diversification Opportunities for Workhorse and Volcon

0.83

Correlation Coefficient

Workhorse  Volcon

Very poor diversification

The 3 months correlation between Workhorse and Volcon is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Workhorse Group and Volcon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volcon Inc and Workhorse 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 Workhorse Group 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 Workhorse i.e., Workhorse and Volcon go up and down completely randomly.

Pair Corralation between Workhorse and Volcon

Given the investment horizon of 90 days Workhorse Group is expected to under-perform the Volcon. But the stock apears to be less risky and, when comparing its historical volatility, Workhorse Group is 1.08 times less risky than Volcon. The stock trades about -0.31 of its potential returns per unit of risk. The Volcon Inc is currently generating about -0.27 of returns per unit of risk over similar time horizon. If you would invest  436.00  in Volcon Inc on December 30, 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 Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Workhorse Group  vs.  Volcon Inc

Workhorse Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Workhorse Group 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 indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 Workhorse and Volcon

The main advantage of trading using opposite Workhorse and Volcon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workhorse 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 Workhorse Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.