Correlation Between Vicinity and Hyzon Motors

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

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

Diversification Opportunities for Vicinity and Hyzon Motors

0.43

Correlation Coefficient

Vicinity  Hyzon Motors

Very weak diversification

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

Pair Corralation between Vicinity and Hyzon Motors

Considering the 90-day investment horizon Vicinity Motor Corp is expected to generate 0.62 times more return on investment than Hyzon Motors. However, Vicinity Motor Corp is 1.61 times less risky than Hyzon Motors. It trades about -0.02 of its potential returns per unit of risk. Hyzon Motors is currently generating about -0.02 per unit of risk. If you would invest  163.00  in Vicinity Motor Corp on January 31, 2024 and sell it today you would lose (96.00) from holding Vicinity Motor Corp or give up 58.9% of portfolio value over 90 days.

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

Vicinity Motor Corp  vs.  Hyzon Motors

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 fragile 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.

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.

Pair Trading with Vicinity and Hyzon Motors

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

The idea behind Vicinity Motor Corp and Hyzon Motors 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.