Correlation Between Lion One and Fredonia Mining
Can any of the company-specific risk be diversified away by investing in both Lion One and Fredonia Mining 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 One and Fredonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion One Metals and Fredonia Mining, you can compare the effects of market volatilities on Lion One and Fredonia Mining 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 One with a short position of Fredonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Fredonia Mining.
Diversification Opportunities for Lion One and Fredonia Mining
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and Fredonia is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Fredonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fredonia Mining and Lion One 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 One Metals are associated (or correlated) with Fredonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fredonia Mining has no effect on the direction of Lion One i.e., Lion One and Fredonia Mining go up and down completely randomly.
Pair Corralation between Lion One and Fredonia Mining
Assuming the 90 days horizon Lion One Metals is expected to under-perform the Fredonia Mining. But the stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 2.36 times less risky than Fredonia Mining. The stock trades about -0.11 of its potential returns per unit of risk. The Fredonia Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Fredonia Mining on October 1, 2024 and sell it today you would earn a total of 0.00 from holding Fredonia Mining or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. Fredonia Mining
Performance |
| Timeline |
| Lion One Metals |
| Fredonia Mining |
Lion One and Fredonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and Fredonia Mining
The main advantage of trading using opposite Lion One and Fredonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Fredonia Mining 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 Fredonia Mining will offset losses from the drop in Fredonia Mining's long position.The idea behind Lion One Metals and Fredonia Mining 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.| Fredonia Mining vs. Precipitate Gold Corp | Fredonia Mining vs. ROKMASTER Resources Corp | Fredonia Mining vs. Rugby Mining Limited |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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