Correlation Between Lion Electric and Evertz Technologies

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

Diversification Opportunities for Lion Electric and Evertz Technologies

-0.1

Correlation Coefficient

Lion Electric  Evertz Technologies

Good diversification

The 3 months correlation between Lion and Evertz is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies 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 Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of Lion Electric i.e., Lion Electric and Evertz Technologies go up and down completely randomly.

Pair Corralation between Lion Electric and Evertz Technologies

Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the Evertz Technologies. In addition to that, Lion Electric is 2.68 times more volatile than Evertz Technologies Limited. It trades about -0.06 of its total potential returns per unit of risk. Evertz Technologies Limited is currently generating about -0.02 per unit of volatility. If you would invest  1,016  in Evertz Technologies Limited on September 14, 2024 and sell it today you would lose (142.00) from holding Evertz Technologies Limited or give up 13.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.32%
Values	Daily Returns

Lion Electric Corp  vs.  Evertz Technologies Limited

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 uncertain 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.

Evertz Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evertz Technologies Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Evertz Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lion Electric and Evertz Technologies

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

The idea behind Lion Electric Corp and Evertz Technologies Limited 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.