Correlation Between Lion One and SIMS METAL
Can any of the company-specific risk be diversified away by investing in both Lion One and SIMS METAL 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 SIMS METAL 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 SIMS METAL MGT, you can compare the effects of market volatilities on Lion One and SIMS METAL 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 SIMS METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and SIMS METAL.
Diversification Opportunities for Lion One and SIMS METAL
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and SIMS is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT 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 SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of Lion One i.e., Lion One and SIMS METAL go up and down completely randomly.
Pair Corralation between Lion One and SIMS METAL
Assuming the 90 days horizon Lion One Metals is expected to under-perform the SIMS METAL. In addition to that, Lion One is 1.2 times more volatile than SIMS METAL MGT. It trades about -0.19 of its total potential returns per unit of risk. SIMS METAL MGT is currently generating about -0.01 per unit of volatility. If you would invest 795.00 in SIMS METAL MGT on August 28, 2024 and sell it today you would lose (10.00) from holding SIMS METAL MGT or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. SIMS METAL MGT
Performance |
| Timeline |
| Lion One Metals |
| SIMS METAL MGT |
Lion One and SIMS METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and SIMS METAL
The main advantage of trading using opposite Lion One and SIMS METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, SIMS METAL 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 SIMS METAL will offset losses from the drop in SIMS METAL's long position.| Lion One vs. Franco Nevada | Lion One vs. Agnico Eagle Mines | Lion One vs. Superior Plus Corp | Lion One vs. NMI Holdings |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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