Correlation Between Economic Investment and Lion One
Can any of the company-specific risk be diversified away by investing in both Economic Investment 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 Economic Investment and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Economic Investment Trust and Lion One Metals, you can compare the effects of market volatilities on Economic Investment 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 Economic Investment with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Economic Investment and Lion One.
Diversification Opportunities for Economic Investment and Lion One
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Economic and Lion is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Economic Investment Trust 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 Economic Investment 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 Economic Investment Trust 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 Economic Investment i.e., Economic Investment and Lion One go up and down completely randomly.
Pair Corralation between Economic Investment and Lion One
Assuming the 90 days trading horizon Economic Investment Trust is expected to generate 0.18 times more return on investment than Lion One. However, Economic Investment Trust is 5.51 times less risky than Lion One. It trades about 0.4 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.18 per unit of risk. If you would invest 16,525 in Economic Investment Trust on August 29, 2024 and sell it today you would earn a total of 925.00 from holding Economic Investment Trust or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Economic Investment Trust vs. Lion One Metals
Performance |
| Timeline |
| Economic Investment Trust |
| Lion One Metals |
Economic Investment and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Economic Investment and Lion One
The main advantage of trading using opposite Economic Investment and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Economic Investment 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.| Economic Investment vs. Canadian Natural Resources | Economic Investment vs. Suncor Energy | Economic Investment vs. iShares Canadian HYBrid | Economic Investment vs. Altagas Cum Red |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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