Correlation Between LION ONE and Retail Estates
Can any of the company-specific risk be diversified away by investing in both LION ONE and Retail Estates 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 Retail Estates 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 Retail Estates NV, you can compare the effects of market volatilities on LION ONE and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Retail Estates.
Diversification Opportunities for LION ONE and Retail Estates
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LION and Retail is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of LION ONE i.e., LION ONE and Retail Estates go up and down completely randomly.
Pair Corralation between LION ONE and Retail Estates
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Retail Estates. In addition to that, LION ONE is 7.65 times more volatile than Retail Estates NV. It trades about -0.12 of its total potential returns per unit of risk. Retail Estates NV is currently generating about 0.31 per unit of volatility. If you would invest 5,660 in Retail Estates NV on November 28, 2024 and sell it today you would earn a total of 390.00 from holding Retail Estates NV or generate 6.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
LION ONE METALS vs. Retail Estates NV
Performance |
| Timeline |
| LION ONE METALS |
| Retail Estates NV |
LION ONE and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Retail Estates
The main advantage of trading using opposite LION ONE and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.The idea behind LION ONE METALS and Retail Estates NV 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.| Retail Estates vs. RESMINING UNSPADR10 | Retail Estates vs. Nomad Foods | Retail Estates vs. Thai Beverage Public | Retail Estates 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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