Correlation Between LION ONE and Seven West
Can any of the company-specific risk be diversified away by investing in both LION ONE and Seven West 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 Seven West 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 Seven West Media, you can compare the effects of market volatilities on LION ONE and Seven West 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 Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Seven West.
Diversification Opportunities for LION ONE and Seven West
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between LION and Seven is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of LION ONE i.e., LION ONE and Seven West go up and down completely randomly.
Pair Corralation between LION ONE and Seven West
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Seven West. But the stock apears to be less risky and, when comparing its historical volatility, LION ONE METALS is 1.11 times less risky than Seven West. The stock trades about -0.05 of its potential returns per unit of risk. The Seven West Media is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Seven West Media on September 3, 2024 and sell it today you would lose (3.70) from holding Seven West Media or give up 30.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. Seven West Media
Performance |
| Timeline |
| LION ONE METALS |
| Seven West Media |
LION ONE and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Seven West
The main advantage of trading using opposite LION ONE and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West's long position.| LION ONE vs. HomeToGo SE | LION ONE vs. NORTHEAST UTILITIES | LION ONE vs. SBM OFFSHORE | LION ONE vs. Zijin Mining Group |
| Seven West vs. LION ONE METALS | Seven West vs. Aluminum of | Seven West vs. Ming Le Sports | Seven West vs. G III Apparel Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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