Correlation Between LION ONE and Eversource Energy
Can any of the company-specific risk be diversified away by investing in both LION ONE and Eversource 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 Eversource 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 Eversource Energy, you can compare the effects of market volatilities on LION ONE and Eversource 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 Eversource Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Eversource Energy.
Diversification Opportunities for LION ONE and Eversource Energy
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LION and Eversource is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Eversource Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eversource Energy 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 Eversource Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eversource Energy has no effect on the direction of LION ONE i.e., LION ONE and Eversource Energy go up and down completely randomly.
Pair Corralation between LION ONE and Eversource Energy
Assuming the 90 days trading horizon LION ONE METALS is expected to generate 2.3 times more return on investment than Eversource Energy. However, LION ONE is 2.3 times more volatile than Eversource Energy. It trades about 0.02 of its potential returns per unit of risk. Eversource Energy is currently generating about 0.03 per unit of risk. If you would invest 20.00 in LION ONE METALS on September 3, 2024 and sell it today you would earn a total of 0.00 from holding LION ONE METALS or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. Eversource Energy
Performance |
| Timeline |
| LION ONE METALS |
| Eversource Energy |
LION ONE and Eversource Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Eversource Energy
The main advantage of trading using opposite LION ONE and Eversource Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, Eversource 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 Eversource Energy will offset losses from the drop in Eversource Energy's long position.| LION ONE vs. HomeToGo SE | LION ONE vs. NORTHEAST UTILITIES | LION ONE vs. SBM OFFSHORE | LION ONE vs. Zijin Mining Group |
| Eversource Energy vs. Compagnie Plastic Omnium | Eversource Energy vs. Materialise NV | Eversource Energy vs. Goodyear Tire Rubber | Eversource Energy vs. LION ONE METALS |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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