Correlation Between LION ONE and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both LION ONE and KENNAMETAL INC 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 KENNAMETAL INC 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 KENNAMETAL INC, you can compare the effects of market volatilities on LION ONE and KENNAMETAL INC 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 KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and KENNAMETAL INC.
Diversification Opportunities for LION ONE and KENNAMETAL INC
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between LION and KENNAMETAL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC 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 KENNAMETAL INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENNAMETAL INC has no effect on the direction of LION ONE i.e., LION ONE and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between LION ONE and KENNAMETAL INC
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the KENNAMETAL INC. In addition to that, LION ONE is 2.17 times more volatile than KENNAMETAL INC. It trades about -0.05 of its total potential returns per unit of risk. KENNAMETAL INC is currently generating about 0.02 per unit of volatility. If you would invest 2,490 in KENNAMETAL INC on August 28, 2024 and sell it today you would earn a total of 270.00 from holding KENNAMETAL INC or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. KENNAMETAL INC
Performance |
| Timeline |
| LION ONE METALS |
| KENNAMETAL INC |
LION ONE and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and KENNAMETAL INC
The main advantage of trading using opposite LION ONE and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, KENNAMETAL INC 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 KENNAMETAL INC will offset losses from the drop in KENNAMETAL INC's long position.The idea behind LION ONE METALS and KENNAMETAL INC 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.| KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Microsoft | KENNAMETAL INC vs. Microsoft |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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