Correlation Between Fortune Bay and Lion One
Can any of the company-specific risk be diversified away by investing in both Fortune Bay 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 Fortune Bay and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Bay Corp and Lion One Metals, you can compare the effects of market volatilities on Fortune Bay 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 Fortune Bay with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Bay and Lion One.
Diversification Opportunities for Fortune Bay and Lion One
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortune and Lion is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Bay 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 Fortune Bay 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 Fortune Bay 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 Fortune Bay i.e., Fortune Bay and Lion One go up and down completely randomly.
Pair Corralation between Fortune Bay and Lion One
Assuming the 90 days horizon Fortune Bay is expected to generate 3.26 times less return on investment than Lion One. But when comparing it to its historical volatility, Fortune Bay Corp is 1.14 times less risky than Lion One. It trades about 0.07 of its potential returns per unit of risk. Lion One Metals is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Lion One Metals on October 24, 2024 and sell it today you would earn a total of 5.00 from holding Lion One Metals or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Fortune Bay Corp vs. Lion One Metals
Performance |
| Timeline |
| Fortune Bay Corp |
| Lion One Metals |
Fortune Bay and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Bay and Lion One
The main advantage of trading using opposite Fortune Bay and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Bay 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.| Fortune Bay vs. Eros Resources Corp | Fortune Bay vs. Lupaka Gold Corp | Fortune Bay vs. Black Widow Resources | Fortune Bay vs. Magnum Goldcorp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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