Correlation Between Electrameccanica and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Electrameccanica and Lowes Companies 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 Electrameccanica and Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electrameccanica Vehicles Corp and Lowes Companies, you can compare the effects of market volatilities on Electrameccanica and Lowes Companies 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 Electrameccanica with a short position of Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrameccanica and Lowes Companies.
Diversification Opportunities for Electrameccanica and Lowes Companies
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electrameccanica and Lowes is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Electrameccanica Vehicles Corp and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies and Electrameccanica 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 Electrameccanica Vehicles Corp are associated (or correlated) with Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Electrameccanica i.e., Electrameccanica and Lowes Companies go up and down completely randomly.
Pair Corralation between Electrameccanica and Lowes Companies
Given the investment horizon of 90 days Electrameccanica Vehicles Corp is expected to under-perform the Lowes Companies. In addition to that, Electrameccanica is 1.52 times more volatile than Lowes Companies. It trades about -0.65 of its total potential returns per unit of risk. Lowes Companies is currently generating about -0.2 per unit of volatility. If you would invest 24,802 in Lowes Companies on January 19, 2024 and sell it today you would lose (1,661) from holding Lowes Companies or give up 6.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 27.27% |
Values | Daily Returns |
Electrameccanica Vehicles Corp vs. Lowes Companies
Performance |
Timeline |
Electrameccanica Veh |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lowes Companies |
Electrameccanica and Lowes Companies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Electrameccanica and Lowes Companies
The main advantage of trading using opposite Electrameccanica and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electrameccanica position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.Electrameccanica vs. GreenPower Motor | Electrameccanica vs. Workhorse Group | Electrameccanica vs. Cenntro Electric Group | Electrameccanica vs. Volcon Inc |
Lowes Companies vs. Floor Decor Holdings | Lowes Companies vs. LL Flooring Holdings | Lowes Companies vs. Arhaus Inc | Lowes Companies vs. Haverty Furniture Companies |
Check out your portfolio center.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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