Correlation Between LION ONE and ANGLO AMERICAN
Can any of the company-specific risk be diversified away by investing in both LION ONE and ANGLO AMERICAN 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 ANGLO AMERICAN 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 ANGLO AMERICAN SPADR, you can compare the effects of market volatilities on LION ONE and ANGLO AMERICAN 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 ANGLO AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and ANGLO AMERICAN.
Diversification Opportunities for LION ONE and ANGLO AMERICAN
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LION and ANGLO is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and ANGLO AMERICAN SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGLO AMERICAN SPADR 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 ANGLO AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGLO AMERICAN SPADR has no effect on the direction of LION ONE i.e., LION ONE and ANGLO AMERICAN go up and down completely randomly.
Pair Corralation between LION ONE and ANGLO AMERICAN
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the ANGLO AMERICAN. In addition to that, LION ONE is 1.24 times more volatile than ANGLO AMERICAN SPADR. It trades about -0.03 of its total potential returns per unit of risk. ANGLO AMERICAN SPADR is currently generating about 0.01 per unit of volatility. If you would invest 1,671 in ANGLO AMERICAN SPADR on September 2, 2024 and sell it today you would lose (251.00) from holding ANGLO AMERICAN SPADR or give up 15.02% 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. ANGLO AMERICAN SPADR
Performance |
| Timeline |
| LION ONE METALS |
| ANGLO AMERICAN SPADR |
LION ONE and ANGLO AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and ANGLO AMERICAN
The main advantage of trading using opposite LION ONE and ANGLO AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, ANGLO AMERICAN 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 ANGLO AMERICAN will offset losses from the drop in ANGLO AMERICAN's long position.| LION ONE vs. Public Storage | LION ONE vs. NTG Nordic Transport | LION ONE vs. Automatic Data Processing | LION ONE vs. Fidelity National Information |
| ANGLO AMERICAN vs. IMPERIAL TOBACCO | ANGLO AMERICAN vs. MUTUIONLINE | ANGLO AMERICAN vs. CARSALESCOM | ANGLO AMERICAN vs. CarsalesCom |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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