Correlation Between LION ONE and TMX GROUP
Can any of the company-specific risk be diversified away by investing in both LION ONE and TMX GROUP 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 TMX GROUP 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 TMX GROUP LTD, you can compare the effects of market volatilities on LION ONE and TMX GROUP 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 TMX GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and TMX GROUP.
Diversification Opportunities for LION ONE and TMX GROUP
Excellent diversification
The 3 months correlation between LION and TMX is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and TMX GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMX GROUP LTD 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 TMX GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMX GROUP LTD has no effect on the direction of LION ONE i.e., LION ONE and TMX GROUP go up and down completely randomly.
Pair Corralation between LION ONE and TMX GROUP
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the TMX GROUP. In addition to that, LION ONE is 1.98 times more volatile than TMX GROUP LTD. It trades about -0.05 of its total potential returns per unit of risk. TMX GROUP LTD is currently generating about 0.03 per unit of volatility. If you would invest 2,802 in TMX GROUP LTD on September 12, 2024 and sell it today you would earn a total of 78.00 from holding TMX GROUP LTD or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
LION ONE METALS vs. TMX GROUP LTD
Performance |
| Timeline |
| LION ONE METALS |
| TMX GROUP LTD |
LION ONE and TMX GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and TMX GROUP
The main advantage of trading using opposite LION ONE and TMX GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, TMX GROUP 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 TMX GROUP will offset losses from the drop in TMX GROUP's long position.The idea behind LION ONE METALS and TMX GROUP LTD 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.| TMX GROUP vs. LION ONE METALS | TMX GROUP vs. SERI INDUSTRIAL EO | TMX GROUP vs. GRIFFIN MINING LTD | TMX GROUP vs. MCEWEN MINING INC |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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