Correlation Between Lion One and McPhy Energy
Can any of the company-specific risk be diversified away by investing in both Lion One and McPhy Energy 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 McPhy Energy 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 McPhy Energy SA, you can compare the effects of market volatilities on Lion One and McPhy Energy 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 McPhy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and McPhy Energy.
Diversification Opportunities for Lion One and McPhy Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and McPhy is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and McPhy Energy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McPhy Energy SA 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 McPhy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McPhy Energy SA has no effect on the direction of Lion One i.e., Lion One and McPhy Energy go up and down completely randomly.
Pair Corralation between Lion One and McPhy Energy
Assuming the 90 days horizon Lion One Metals is expected to generate 0.81 times more return on investment than McPhy Energy. However, Lion One Metals is 1.23 times less risky than McPhy Energy. It trades about -0.17 of its potential returns per unit of risk. McPhy Energy SA is currently generating about -0.57 per unit of risk. If you would invest 22.00 in Lion One Metals on August 30, 2024 and sell it today you would lose (3.00) from holding Lion One Metals or give up 13.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lion One Metals vs. McPhy Energy SA
Performance |
| Timeline |
| Lion One Metals |
| McPhy Energy SA |
Lion One and McPhy Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and McPhy Energy
The main advantage of trading using opposite Lion One and McPhy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, McPhy Energy 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 McPhy Energy will offset losses from the drop in McPhy Energy's long position.| Lion One vs. Franco Nevada | Lion One vs. Wheaton Precious Metals | Lion One vs. Superior Plus Corp | Lion One vs. NMI Holdings |
| McPhy Energy vs. Lion One Metals | McPhy Energy vs. LION ONE METALS | McPhy Energy vs. GREENX METALS LTD | McPhy Energy vs. FIREWEED METALS P |
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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