Correlation Between Lion Financial and Raymond James
Can any of the company-specific risk be diversified away by investing in both Lion Financial and Raymond James 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 Lion Financial and Raymond James into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Financial Group and Raymond James Financial, you can compare the effects of market volatilities on Lion Financial and Raymond James 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 Lion Financial with a short position of Raymond James. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Financial and Raymond James.
Diversification Opportunities for Lion Financial and Raymond James
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and Raymond is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group and Raymond James Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raymond James Financial and Lion Financial 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 Lion Financial Group are associated (or correlated) with Raymond James. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raymond James Financial has no effect on the direction of Lion Financial i.e., Lion Financial and Raymond James go up and down completely randomly.
Pair Corralation between Lion Financial and Raymond James
Assuming the 90 days horizon Lion Financial Group is expected to generate 40.59 times more return on investment than Raymond James. However, Lion Financial is 40.59 times more volatile than Raymond James Financial. It trades about 0.05 of its potential returns per unit of risk. Raymond James Financial is currently generating about 0.24 per unit of risk. If you would invest 0.74 in Lion Financial Group on August 24, 2024 and sell it today you would earn a total of 0.02 from holding Lion Financial Group or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Financial Group vs. Raymond James Financial
Performance |
| Timeline |
| Lion Financial Group |
| Raymond James Financial |
Lion Financial and Raymond James Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Financial and Raymond James
The main advantage of trading using opposite Lion Financial and Raymond James positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Financial position performs unexpectedly, Raymond James 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 Raymond James will offset losses from the drop in Raymond James' long position.The idea behind Lion Financial Group and Raymond James Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Raymond James vs. Washington Federal | Raymond James vs. Truist Financial | Raymond James vs. The Charles Schwab | Raymond James vs. Associated Banc Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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