Correlation Between Dream Industrial and Lion One
Can any of the company-specific risk be diversified away by investing in both Dream Industrial 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 Dream Industrial and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Industrial Real and Lion One Metals, you can compare the effects of market volatilities on Dream Industrial 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 Dream Industrial with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Industrial and Lion One.
Diversification Opportunities for Dream Industrial and Lion One
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dream and Lion is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dream Industrial Real 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 Dream Industrial 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 Dream Industrial Real 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 Dream Industrial i.e., Dream Industrial and Lion One go up and down completely randomly.
Pair Corralation between Dream Industrial and Lion One
Assuming the 90 days trading horizon Dream Industrial is expected to generate 30.27 times less return on investment than Lion One. But when comparing it to its historical volatility, Dream Industrial Real is 8.14 times less risky than Lion One. It trades about 0.08 of its potential returns per unit of risk. Lion One Metals is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Lion One Metals on October 30, 2024 and sell it today you would earn a total of 10.00 from holding Lion One Metals or generate 43.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Industrial Real vs. Lion One Metals
Performance |
| Timeline |
| Dream Industrial Real |
| Lion One Metals |
Dream Industrial and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Industrial and Lion One
The main advantage of trading using opposite Dream Industrial and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Industrial 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.| Dream Industrial vs. Granite Real Estate | Dream Industrial vs. NorthWest Healthcare Properties | Dream Industrial vs. Choice Properties Real | Dream Industrial vs. Canadian Apartment Properties |
| Lion One vs. NV Gold Corp | Lion One vs. Prosper Gold Corp | Lion One vs. Kesselrun Resources | Lion One vs. iShares Canadian HYBrid |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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