Correlation Between Hyzon Motors and Canoo

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

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

Diversification Opportunities for Hyzon Motors and Canoo

0.3

Correlation Coefficient

Hyzon Motors  Canoo

Weak diversification

The 3 months correlation between Hyzon and Canoo is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hyzon Motors and Canoo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoo Inc and Hyzon Motors 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 Hyzon Motors are associated (or correlated) with Canoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoo Inc has no effect on the direction of Hyzon Motors i.e., Hyzon Motors and Canoo go up and down completely randomly.

Pair Corralation between Hyzon Motors and Canoo

Given the investment horizon of 90 days Hyzon Motors is expected to generate 0.86 times more return on investment than Canoo. However, Hyzon Motors is 1.16 times less risky than Canoo. It trades about -0.02 of its potential returns per unit of risk. Canoo Inc is currently generating about -0.04 per unit of risk. If you would invest  297.00  in Hyzon Motors on January 31, 2024 and sell it today you would lose (241.00) from holding Hyzon Motors or give up 81.14% of portfolio value over 90 days.

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

Hyzon Motors  vs.  Canoo Inc

Hyzon Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyzon Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Canoo Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Canoo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Canoo is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hyzon Motors and Canoo

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

The idea behind Hyzon Motors and Canoo Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.