Correlation Between Nintendo and Lion One
Can any of the company-specific risk be diversified away by investing in both Nintendo 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 Nintendo and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nintendo Co and Lion One Metals, you can compare the effects of market volatilities on Nintendo 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 Nintendo with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nintendo and Lion One.
Diversification Opportunities for Nintendo and Lion One
Good diversification
The 3 months correlation between Nintendo and Lion is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nintendo Co 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 Nintendo 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 Nintendo Co 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 Nintendo i.e., Nintendo and Lion One go up and down completely randomly.
Pair Corralation between Nintendo and Lion One
Assuming the 90 days trading horizon Nintendo Co is expected to generate 0.5 times more return on investment than Lion One. However, Nintendo Co is 1.98 times less risky than Lion One. It trades about 0.05 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.05 per unit of risk. If you would invest 1,083 in Nintendo Co on September 5, 2024 and sell it today you would earn a total of 327.00 from holding Nintendo Co or generate 30.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Nintendo Co vs. Lion One Metals
Performance |
| Timeline |
| Nintendo |
| Lion One Metals |
Nintendo and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nintendo and Lion One
The main advantage of trading using opposite Nintendo and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nintendo 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.| Nintendo vs. Nintendo Co | Nintendo vs. Sea Limited | Nintendo vs. Take Two Interactive Software | Nintendo vs. Bilibili |
| Lion One vs. MICRONIC MYDATA | Lion One vs. Hyrican Informationssysteme Aktiengesellschaft | Lion One vs. UNITED RENTALS | Lion One vs. INFORMATION SVC GRP |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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