Correlation Between Fevertree Drinks and Lion One
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks PLC and Lion One Metals, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Lion One.
Diversification Opportunities for Fevertree Drinks and Lion One
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fevertree and Lion is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC 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 Fevertree Drinks 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 Fevertree Drinks PLC 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 Fevertree Drinks i.e., Fevertree Drinks and Lion One go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Lion One
Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to under-perform the Lion One. But the stock apears to be less risky and, when comparing its historical volatility, Fevertree Drinks PLC is 2.36 times less risky than Lion One. The stock trades about -0.15 of its potential returns per unit of risk. The Lion One Metals is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Lion One Metals on September 3, 2024 and sell it today you would lose (13.00) from holding Lion One Metals or give up 40.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks PLC vs. Lion One Metals
Performance |
| Timeline |
| Fevertree Drinks PLC |
| Lion One Metals |
Fevertree Drinks and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Lion One
The main advantage of trading using opposite Fevertree Drinks and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. United Natural Foods | Fevertree Drinks vs. Boyd Gaming | Fevertree Drinks vs. TYSON FOODS A | Fevertree Drinks vs. Penn National Gaming |
| Lion One vs. Cars Inc | Lion One vs. Chunghwa Telecom Co | Lion One vs. United Internet AG | Lion One vs. JAPAN TOBACCO UNSPADR12 |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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