Correlation Between Lion Electric and Alimentation Couchen

Can any of the company-specific risk be diversified away by investing in both Lion Electric and Alimentation Couchen 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 Alimentation Couchen 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 Alimentation Couchen Tard, you can compare the effects of market volatilities on Lion Electric and Alimentation Couchen 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 Alimentation Couchen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Alimentation Couchen.

Diversification Opportunities for Lion Electric and Alimentation Couchen

-0.69

Correlation Coefficient

Lion Electric  Alimentation Couchen

Excellent diversification

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

Pair Corralation between Lion Electric and Alimentation Couchen

Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the Alimentation Couchen. In addition to that, Lion Electric is 7.65 times more volatile than Alimentation Couchen Tard. It trades about -0.07 of its total potential returns per unit of risk. Alimentation Couchen Tard is currently generating about 0.12 per unit of volatility. If you would invest  7,443  in Alimentation Couchen Tard on September 4, 2024 and sell it today you would earn a total of  860.00  from holding Alimentation Couchen Tard or generate 11.55% 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.  Alimentation Couchen Tard

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 technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Alimentation Couchen Tard

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alimentation Couchen Tard are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Alimentation Couchen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lion Electric and Alimentation Couchen

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

The idea behind Lion Electric Corp and Alimentation Couchen Tard 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.