Correlation Between Lion One and Darden Restaurants
Can any of the company-specific risk be diversified away by investing in both Lion One and Darden Restaurants 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 Darden Restaurants 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 Darden Restaurants, you can compare the effects of market volatilities on Lion One and Darden Restaurants 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 Darden Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Darden Restaurants.
Diversification Opportunities for Lion One and Darden Restaurants
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and Darden is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants 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 Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of Lion One i.e., Lion One and Darden Restaurants go up and down completely randomly.
Pair Corralation between Lion One and Darden Restaurants
Assuming the 90 days horizon Lion One Metals is expected to under-perform the Darden Restaurants. In addition to that, Lion One is 2.47 times more volatile than Darden Restaurants. It trades about -0.04 of its total potential returns per unit of risk. Darden Restaurants is currently generating about 0.35 per unit of volatility. If you would invest 14,800 in Darden Restaurants on September 1, 2024 and sell it today you would earn a total of 1,735 from holding Darden Restaurants or generate 11.72% 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. Darden Restaurants
Performance |
| Timeline |
| Lion One Metals |
| Darden Restaurants |
Lion One and Darden Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and Darden Restaurants
The main advantage of trading using opposite Lion One and Darden Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Darden Restaurants 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 Darden Restaurants will offset losses from the drop in Darden Restaurants' long position.| Lion One vs. NIPPON STEEL SPADR | Lion One vs. United States Steel | Lion One vs. Nippon Steel | Lion One vs. Singapore Telecommunications Limited |
| Darden Restaurants vs. GFL ENVIRONM | Darden Restaurants vs. CosmoSteel Holdings Limited | Darden Restaurants vs. COSMOSTEEL HLDGS | Darden Restaurants vs. NORWEGIAN AIR SHUT |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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