Correlation Between Hyzon Motors and Vicinity

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

By analyzing existing cross correlation between Hyzon Motors and Vicinity Motor Corp, you can compare the effects of market volatilities on Hyzon Motors and Vicinity 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 Vicinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyzon Motors and Vicinity.

Diversification Opportunities for Hyzon Motors and Vicinity

0.43

Correlation Coefficient

Hyzon Motors  Vicinity

Very weak diversification

The 3 months correlation between Hyzon and Vicinity is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hyzon Motors and Vicinity Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Motor Corp 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 Vicinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Motor Corp has no effect on the direction of Hyzon Motors i.e., Hyzon Motors and Vicinity go up and down completely randomly.

Pair Corralation between Hyzon Motors and Vicinity

Given the investment horizon of 90 days Hyzon Motors is expected to under-perform the Vicinity. But the stock apears to be less risky and, when comparing its historical volatility, Hyzon Motors is 2.32 times less risky than Vicinity. The stock trades about -0.73 of its potential returns per unit of risk. The Vicinity Motor Corp is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Vicinity Motor Corp on January 31, 2024 and sell it today you would lose (21.00) from holding Vicinity Motor Corp or give up 23.86% of portfolio value over 90 days.

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

Hyzon Motors  vs.  Vicinity Motor Corp

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.

Vicinity Motor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vicinity Motor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Hyzon Motors and Vicinity

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

The idea behind Hyzon Motors and Vicinity Motor 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..