Correlation Between Hyster Yale and Lion Electric

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

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

Diversification Opportunities for Hyster Yale and Lion Electric

0.77

Correlation Coefficient

Hyster Yale  Lion Electric

Poor diversification

The 3 months correlation between Hyster and Lion is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling 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 Hyster Yale 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 Hyster Yale Materials Handling 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 Hyster Yale i.e., Hyster Yale and Lion Electric go up and down completely randomly.

Pair Corralation between Hyster Yale and Lion Electric

Allowing for the 90-day total investment horizon Hyster Yale Materials Handling is expected to generate 0.75 times more return on investment than Lion Electric. However, Hyster Yale Materials Handling is 1.34 times less risky than Lion Electric. It trades about 0.06 of its potential returns per unit of risk. Lion Electric Corp is currently generating about -0.07 per unit of risk. If you would invest  3,146  in Hyster Yale Materials Handling on January 25, 2024 and sell it today you would earn a total of  3,015  from holding Hyster Yale Materials Handling or generate 95.84% return on investment over 90 days.

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

Hyster Yale Materials Handling  vs.  Lion Electric Corp

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Hyster Yale is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Hyster Yale and Lion Electric

The main advantage of trading using opposite Hyster Yale and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyster Yale 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 Hyster Yale Materials Handling 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.

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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.