Correlation Between Lion One and NioCorp Developments
Can any of the company-specific risk be diversified away by investing in both Lion One and NioCorp Developments 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 NioCorp Developments 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 NioCorp Developments Ltd, you can compare the effects of market volatilities on Lion One and NioCorp Developments 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 NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and NioCorp Developments.
Diversification Opportunities for Lion One and NioCorp Developments
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lion and NioCorp is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments 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 NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of Lion One i.e., Lion One and NioCorp Developments go up and down completely randomly.
Pair Corralation between Lion One and NioCorp Developments
Assuming the 90 days horizon Lion One Metals is expected to generate 1.56 times more return on investment than NioCorp Developments. However, Lion One is 1.56 times more volatile than NioCorp Developments Ltd. It trades about 0.25 of its potential returns per unit of risk. NioCorp Developments Ltd is currently generating about 0.29 per unit of risk. If you would invest 18.00 in Lion One Metals on October 20, 2024 and sell it today you would earn a total of 4.00 from holding Lion One Metals or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Lion One Metals vs. NioCorp Developments Ltd
Performance |
| Timeline |
| Lion One Metals |
| NioCorp Developments |
Lion One and NioCorp Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and NioCorp Developments
The main advantage of trading using opposite Lion One and NioCorp Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, NioCorp Developments 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 NioCorp Developments will offset losses from the drop in NioCorp Developments' long position.| Lion One vs. Irving Resources | Lion One vs. Headwater Gold | Lion One vs. Novo Resources Corp | Lion One vs. Snowline Gold Corp |
| NioCorp Developments vs. Patterson UTI Energy | NioCorp Developments vs. Entravision Communications | NioCorp Developments vs. Borr Drilling | NioCorp Developments vs. Pembina Pipeline |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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