Correlation Between Lion One and Cars
Can any of the company-specific risk be diversified away by investing in both Lion One and Cars 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 Cars 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 Cars Inc, you can compare the effects of market volatilities on Lion One and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Cars.
Diversification Opportunities for Lion One and Cars
Excellent diversification
The 3 months correlation between Lion and Cars is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Lion One i.e., Lion One and Cars go up and down completely randomly.
Pair Corralation between Lion One and Cars
Assuming the 90 days horizon Lion One is expected to generate 2.46 times less return on investment than Cars. In addition to that, Lion One is 1.86 times more volatile than Cars Inc. It trades about 0.02 of its total potential returns per unit of risk. Cars Inc is currently generating about 0.11 per unit of volatility. If you would invest 1,590 in Cars Inc on September 3, 2024 and sell it today you would earn a total of 260.00 from holding Cars Inc or generate 16.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. Cars Inc
Performance |
| Timeline |
| Lion One Metals |
| Cars Inc |
Lion One and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and Cars
The main advantage of trading using opposite Lion One and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Lion One vs. Cars Inc | Lion One vs. Chunghwa Telecom Co | Lion One vs. United Internet AG | Lion One vs. JAPAN TOBACCO UNSPADR12 |
| Cars vs. Tower One Wireless | Cars vs. Corporate Office Properties | Cars vs. Check Point Software | Cars vs. MACOM Technology Solutions |
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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