Correlation Between Xos and Lion Electric

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

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

Diversification Opportunities for Xos and Lion Electric

0.53

Correlation Coefficient

Xos  Lion Electric

Very weak diversification

The 3 months correlation between Xos and Lion is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Xos Inc 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 Xos 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 Xos Inc 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 Xos i.e., Xos and Lion Electric go up and down completely randomly.

Pair Corralation between Xos and Lion Electric

Considering the 90-day investment horizon Xos Inc is expected to generate 0.5 times more return on investment than Lion Electric. However, Xos Inc is 1.99 times less risky than Lion Electric. It trades about -0.01 of its potential returns per unit of risk. Lion Electric Corp is currently generating about -0.27 per unit of risk. If you would invest  461.00  in Xos Inc on August 28, 2024 and sell it today you would lose (23.00) from holding Xos Inc or give up 4.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Xos Inc  vs.  Lion Electric Corp

Xos Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xos Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Xos and Lion Electric

The main advantage of trading using opposite Xos and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xos 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 Xos Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.