Correlation Between Major Drilling and Lion One
Can any of the company-specific risk be diversified away by investing in both Major Drilling and Lion One 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 Major Drilling and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Lion One Metals, you can compare the effects of market volatilities on Major Drilling and Lion One 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 Major Drilling with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Lion One.
Diversification Opportunities for Major Drilling and Lion One
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Major and Lion is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and Major Drilling 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 Major Drilling Group are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Major Drilling i.e., Major Drilling and Lion One go up and down completely randomly.
Pair Corralation between Major Drilling and Lion One
Assuming the 90 days horizon Major Drilling Group is expected to generate 0.48 times more return on investment than Lion One. However, Major Drilling Group is 2.1 times less risky than Lion One. It trades about 0.05 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.12 per unit of risk. If you would invest 570.00 in Major Drilling Group on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Major Drilling Group or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Major Drilling Group vs. Lion One Metals
Performance |
| Timeline |
| Major Drilling Group |
| Lion One Metals |
Major Drilling and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Lion One
The main advantage of trading using opposite Major Drilling and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, Lion One 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 One will offset losses from the drop in Lion One's long position.| Major Drilling vs. Goosehead Insurance | Major Drilling vs. International Game Technology | Major Drilling vs. FUTURE GAMING GRP | Major Drilling vs. Zurich Insurance Group |
| Lion One vs. Franco Nevada | Lion One vs. Superior Plus Corp | Lion One vs. SIVERS SEMICONDUCTORS AB | Lion One vs. Norsk Hydro ASA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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