Correlation Between Lion One and New Found
Can any of the company-specific risk be diversified away by investing in both Lion One and New Found 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 New Found 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 New Found Gold, you can compare the effects of market volatilities on Lion One and New Found 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 New Found. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and New Found.
Diversification Opportunities for Lion One and New Found
Average diversification
The 3 months correlation between Lion and New is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and New Found Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Found Gold 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 New Found. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Found Gold has no effect on the direction of Lion One i.e., Lion One and New Found go up and down completely randomly.
Pair Corralation between Lion One and New Found
Assuming the 90 days horizon Lion One Metals is expected to under-perform the New Found. In addition to that, Lion One is 1.5 times more volatile than New Found Gold. It trades about -0.1 of its total potential returns per unit of risk. New Found Gold is currently generating about 0.14 per unit of volatility. If you would invest 172.00 in New Found Gold on November 28, 2024 and sell it today you would earn a total of 21.00 from holding New Found Gold or generate 12.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lion One Metals vs. New Found Gold
Performance |
| Timeline |
| Lion One Metals |
| New Found Gold |
Lion One and New Found Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and New Found
The main advantage of trading using opposite Lion One and New Found positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, New Found 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 New Found will offset losses from the drop in New Found's long position.| Lion One vs. Irving Resources | Lion One vs. Headwater Gold | Lion One vs. Novo Resources Corp | Lion One vs. Snowline Gold Corp |
| New Found vs. Sokoman Minerals Corp | New Found vs. Irving Resources | New Found vs. Lion One Metals | New Found vs. Exploits Discovery 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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