Correlation Between Lion One and Ecolab
Can any of the company-specific risk be diversified away by investing in both Lion One and Ecolab 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 Ecolab 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 Ecolab Inc, you can compare the effects of market volatilities on Lion One and Ecolab 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 Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Ecolab.
Diversification Opportunities for Lion One and Ecolab
Very weak diversification
The 3 months correlation between Lion and Ecolab is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Lion One i.e., Lion One and Ecolab go up and down completely randomly.
Pair Corralation between Lion One and Ecolab
Assuming the 90 days horizon Lion One Metals is expected to generate 4.08 times more return on investment than Ecolab. However, Lion One is 4.08 times more volatile than Ecolab Inc. It trades about 0.02 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.03 per unit of risk. If you would invest 19.00 in Lion One Metals on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Lion One Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. Ecolab Inc
Performance |
| Timeline |
| Lion One Metals |
| Ecolab Inc |
Lion One and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and Ecolab
The main advantage of trading using opposite Lion One and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's 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 |
| Ecolab vs. PLAY2CHILL SA ZY | Ecolab vs. Lion One Metals | Ecolab vs. Columbia Sportswear | Ecolab vs. VIAPLAY GROUP 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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