Correlation Between Lion Electric and Manitowoc

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

Diversification Opportunities for Lion Electric and Manitowoc

0.71

Correlation Coefficient

Lion Electric  Manitowoc

Poor diversification

The 3 months correlation between Lion and Manitowoc is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc 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 Manitowoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitowoc has no effect on the direction of Lion Electric i.e., Lion Electric and Manitowoc go up and down completely randomly.

Pair Corralation between Lion Electric and Manitowoc

Considering the 90-day investment horizon Lion Electric Corp is expected to under-perform the Manitowoc. In addition to that, Lion Electric is 1.73 times more volatile than Manitowoc. It trades about -0.28 of its total potential returns per unit of risk. Manitowoc is currently generating about -0.14 per unit of volatility. If you would invest  1,351  in Manitowoc on February 8, 2024 and sell it today you would lose (88.00) from holding Manitowoc or give up 6.51% of portfolio value over 90 days.

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

Lion Electric Corp  vs.  Manitowoc

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

Manitowoc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manitowoc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Lion Electric and Manitowoc

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

The idea behind Lion Electric Corp and Manitowoc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.