Correlation Between LION ONE and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both LION ONE and Lowes Companies 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 Lowes Companies 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 Lowes Companies, you can compare the effects of market volatilities on LION ONE and Lowes Companies 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 Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Lowes Companies.
Diversification Opportunities for LION ONE and Lowes Companies
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between LION and Lowes is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of LION ONE i.e., LION ONE and Lowes Companies go up and down completely randomly.
Pair Corralation between LION ONE and Lowes Companies
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Lowes Companies. In addition to that, LION ONE is 2.67 times more volatile than Lowes Companies. It trades about -0.07 of its total potential returns per unit of risk. Lowes Companies is currently generating about 0.06 per unit of volatility. If you would invest 19,505 in Lowes Companies on September 12, 2024 and sell it today you would earn a total of 6,585 from holding Lowes Companies or generate 33.76% 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. Lowes Companies
Performance |
| Timeline |
| LION ONE METALS |
| Lowes Companies |
LION ONE and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Lowes Companies
The main advantage of trading using opposite LION ONE and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.The idea behind LION ONE METALS and Lowes Companies 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.| Lowes Companies vs. Sumitomo Rubber Industries | Lowes Companies vs. Vulcan Materials | Lowes Companies vs. LION ONE METALS | Lowes Companies vs. APPLIED MATERIALS |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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