Correlation Between Lion One and Murata Manufacturing
Can any of the company-specific risk be diversified away by investing in both Lion One and Murata Manufacturing 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 Murata Manufacturing 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 Murata Manufacturing Co, you can compare the effects of market volatilities on Lion One and Murata Manufacturing 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 Murata Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Murata Manufacturing.
Diversification Opportunities for Lion One and Murata Manufacturing
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and Murata is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Murata Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murata Manufacturing 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 Murata Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murata Manufacturing has no effect on the direction of Lion One i.e., Lion One and Murata Manufacturing go up and down completely randomly.
Pair Corralation between Lion One and Murata Manufacturing
Assuming the 90 days horizon Lion One Metals is expected to under-perform the Murata Manufacturing. In addition to that, Lion One is 2.59 times more volatile than Murata Manufacturing Co. It trades about -0.06 of its total potential returns per unit of risk. Murata Manufacturing Co is currently generating about -0.02 per unit of volatility. If you would invest 1,821 in Murata Manufacturing Co on September 12, 2024 and sell it today you would lose (255.00) from holding Murata Manufacturing Co or give up 14.0% 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. Murata Manufacturing Co
Performance |
| Timeline |
| Lion One Metals |
| Murata Manufacturing |
Lion One and Murata Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and Murata Manufacturing
The main advantage of trading using opposite Lion One and Murata Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Murata Manufacturing 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 Murata Manufacturing will offset losses from the drop in Murata Manufacturing's long position.| Lion One vs. Franco Nevada | Lion One vs. Superior Plus Corp | Lion One vs. SIVERS SEMICONDUCTORS AB | Lion One vs. Norsk Hydro ASA |
| Murata Manufacturing vs. Meiko Electronics Co | Murata Manufacturing vs. Benchmark Electronics | Murata Manufacturing vs. STMICROELECTRONICS | Murata Manufacturing vs. Lion One Metals |
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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