Correlation Between Natural Health and Lion One
Can any of the company-specific risk be diversified away by investing in both Natural Health and Lion One 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 Natural Health and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Health Trends and Lion One Metals, you can compare the effects of market volatilities on Natural Health and Lion One 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 Natural Health with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and Lion One.
Diversification Opportunities for Natural Health and Lion One
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Natural and Lion is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and Natural Health 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 Natural Health Trends are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Natural Health i.e., Natural Health and Lion One go up and down completely randomly.
Pair Corralation between Natural Health and Lion One
Assuming the 90 days trading horizon Natural Health Trends is expected to generate 0.46 times more return on investment than Lion One. However, Natural Health Trends is 2.2 times less risky than Lion One. It trades about 0.01 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.06 per unit of risk. If you would invest 444.00 in Natural Health Trends on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Natural Health Trends or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trends vs. Lion One Metals
Performance |
| Timeline |
| Natural Health Trends |
| Lion One Metals |
Natural Health and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and Lion One
The main advantage of trading using opposite Natural Health and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Natural Health vs. Lendlease Group | Natural Health vs. FUYO GENERAL LEASE | Natural Health vs. Ares Management Corp | Natural Health vs. INVITATION HOMES DL |
| Lion One vs. Franco Nevada | Lion One vs. Superior Plus Corp | Lion One vs. SIVERS SEMICONDUCTORS AB | Lion One vs. Norsk Hydro ASA |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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