Correlation Between LION ONE and Repsol
Can any of the company-specific risk be diversified away by investing in both LION ONE and Repsol 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 Repsol 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 Repsol, you can compare the effects of market volatilities on LION ONE and Repsol 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 Repsol. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Repsol.
Diversification Opportunities for LION ONE and Repsol
Average diversification
The 3 months correlation between LION and Repsol is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Repsol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol 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 Repsol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol has no effect on the direction of LION ONE i.e., LION ONE and Repsol go up and down completely randomly.
Pair Corralation between LION ONE and Repsol
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Repsol. In addition to that, LION ONE is 2.56 times more volatile than Repsol. It trades about -0.05 of its total potential returns per unit of risk. Repsol is currently generating about 0.02 per unit of volatility. If you would invest 1,175 in Repsol on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Repsol or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. Repsol
Performance |
| Timeline |
| LION ONE METALS |
| Repsol |
LION ONE and Repsol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Repsol
The main advantage of trading using opposite LION ONE and Repsol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, Repsol 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 Repsol will offset losses from the drop in Repsol's long position.| LION ONE vs. HomeToGo SE | LION ONE vs. NORTHEAST UTILITIES | LION ONE vs. SBM OFFSHORE | LION ONE vs. Zijin Mining Group |
| Repsol vs. CyberArk Software | Repsol vs. LION ONE METALS | Repsol vs. KENNAMETAL INC | Repsol vs. PSI Software AG |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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