Correlation Between LION ONE and TOTAL ENERGY
Can any of the company-specific risk be diversified away by investing in both LION ONE and TOTAL 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 TOTAL 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 TOTAL ENERGY SERVS, you can compare the effects of market volatilities on LION ONE and TOTAL 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 TOTAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and TOTAL ENERGY.
Diversification Opportunities for LION ONE and TOTAL ENERGY
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LION and TOTAL is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and TOTAL ENERGY SERVS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL ENERGY SERVS 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 TOTAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL ENERGY SERVS has no effect on the direction of LION ONE i.e., LION ONE and TOTAL ENERGY go up and down completely randomly.
Pair Corralation between LION ONE and TOTAL ENERGY
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the TOTAL ENERGY. In addition to that, LION ONE is 1.75 times more volatile than TOTAL ENERGY SERVS. It trades about -0.05 of its total potential returns per unit of risk. TOTAL ENERGY SERVS is currently generating about 0.05 per unit of volatility. If you would invest 550.00 in TOTAL ENERGY SERVS on September 12, 2024 and sell it today you would earn a total of 258.00 from holding TOTAL ENERGY SERVS or generate 46.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
LION ONE METALS vs. TOTAL ENERGY SERVS
Performance |
| Timeline |
| LION ONE METALS |
| TOTAL ENERGY SERVS |
LION ONE and TOTAL ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and TOTAL ENERGY
The main advantage of trading using opposite LION ONE and TOTAL ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, TOTAL 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 TOTAL ENERGY will offset losses from the drop in TOTAL ENERGY's long position.The idea behind LION ONE METALS and TOTAL ENERGY SERVS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| TOTAL ENERGY vs. Gamma Communications plc | TOTAL ENERGY vs. MOLSON RS BEVERAGE | TOTAL ENERGY vs. Consolidated Communications Holdings | TOTAL ENERGY vs. THAI BEVERAGE |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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