Correlation Between Falcon Gold and Lion One
Can any of the company-specific risk be diversified away by investing in both Falcon Gold 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 Falcon Gold and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Gold Corp and Lion One Metals, you can compare the effects of market volatilities on Falcon Gold 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 Falcon Gold with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Gold and Lion One.
Diversification Opportunities for Falcon Gold and Lion One
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Falcon and Lion is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Gold Corp 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 Falcon Gold 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 Falcon Gold Corp 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 Falcon Gold i.e., Falcon Gold and Lion One go up and down completely randomly.
Pair Corralation between Falcon Gold and Lion One
Assuming the 90 days horizon Falcon Gold Corp is expected to generate 3.4 times more return on investment than Lion One. However, Falcon Gold is 3.4 times more volatile than Lion One Metals. It trades about -0.06 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.3 per unit of risk. If you would invest 3.20 in Falcon Gold Corp on August 30, 2024 and sell it today you would lose (0.72) from holding Falcon Gold Corp or give up 22.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Falcon Gold Corp vs. Lion One Metals
Performance |
| Timeline |
| Falcon Gold Corp |
| Lion One Metals |
Falcon Gold and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Gold and Lion One
The main advantage of trading using opposite Falcon Gold and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Gold 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.| Falcon Gold vs. Altamira Gold Corp | Falcon Gold vs. Precipitate Gold Corp | Falcon Gold vs. KORE Mining | Falcon Gold vs. Puma Exploration |
| Lion One vs. Silver Hammer Mining | Lion One vs. Reyna Silver Corp | Lion One vs. Guanajuato Silver | Lion One vs. Silver One Resources |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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