Correlation Between Lion One and Eloro Resources
Can any of the company-specific risk be diversified away by investing in both Lion One and Eloro Resources 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 Eloro Resources 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 Eloro Resources, you can compare the effects of market volatilities on Lion One and Eloro Resources 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 Eloro Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Eloro Resources.
Diversification Opportunities for Lion One and Eloro Resources
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lion and Eloro is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Eloro Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eloro Resources 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 Eloro Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eloro Resources has no effect on the direction of Lion One i.e., Lion One and Eloro Resources go up and down completely randomly.
Pair Corralation between Lion One and Eloro Resources
Assuming the 90 days horizon Lion One Metals is expected to generate 1.67 times more return on investment than Eloro Resources. However, Lion One is 1.67 times more volatile than Eloro Resources. It trades about -0.07 of its potential returns per unit of risk. Eloro Resources is currently generating about -0.12 per unit of risk. If you would invest 23.00 in Lion One Metals on November 27, 2024 and sell it today you would lose (3.00) from holding Lion One Metals or give up 13.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. Eloro Resources
Performance |
| Timeline |
| Lion One Metals |
| Eloro Resources |
Lion One and Eloro Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and Eloro Resources
The main advantage of trading using opposite Lion One and Eloro Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Eloro Resources 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 Eloro Resources will offset losses from the drop in Eloro Resources' long position.| Lion One vs. Irving Resources | Lion One vs. Headwater Gold | Lion One vs. Novo Resources Corp | Lion One vs. Snowline Gold Corp |
| Eloro Resources vs. Labrador Gold Corp | Eloro Resources vs. Lion One Metals | Eloro Resources vs. Novo Resources Corp | Eloro Resources vs. Irving 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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