Correlation Between Lion One and American Homes
Can any of the company-specific risk be diversified away by investing in both Lion One and American Homes 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 American Homes 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 American Homes 4, you can compare the effects of market volatilities on Lion One and American Homes 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 American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and American Homes.
Diversification Opportunities for Lion One and American Homes
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lion and American is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 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 American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Lion One i.e., Lion One and American Homes go up and down completely randomly.
Pair Corralation between Lion One and American Homes
Assuming the 90 days horizon Lion One Metals is expected to under-perform the American Homes. In addition to that, Lion One is 1.61 times more volatile than American Homes 4. It trades about -0.17 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.04 per unit of volatility. If you would invest 3,540 in American Homes 4 on August 29, 2024 and sell it today you would earn a total of 60.00 from holding American Homes 4 or generate 1.69% 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. American Homes 4
Performance |
| Timeline |
| Lion One Metals |
| American Homes 4 |
Lion One and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and American Homes
The main advantage of trading using opposite Lion One and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| Lion One vs. Franco Nevada | Lion One vs. Agnico Eagle Mines | Lion One vs. Superior Plus Corp | Lion One vs. NMI Holdings |
| American Homes vs. Superior Plus Corp | American Homes vs. NMI Holdings | American Homes vs. Origin Agritech | American Homes vs. SIVERS SEMICONDUCTORS AB |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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