Correlation Between T2 Metals and Lion One
Can any of the company-specific risk be diversified away by investing in both T2 Metals 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 T2 Metals and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T2 Metals Corp and Lion One Metals, you can compare the effects of market volatilities on T2 Metals 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 T2 Metals with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of T2 Metals and Lion One.
Diversification Opportunities for T2 Metals and Lion One
Poor diversification
The 3 months correlation between TWO and Lion is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding T2 Metals Corp 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 T2 Metals 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 T2 Metals Corp 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 T2 Metals i.e., T2 Metals and Lion One go up and down completely randomly.
Pair Corralation between T2 Metals and Lion One
Assuming the 90 days horizon T2 Metals Corp is expected to under-perform the Lion One. In addition to that, T2 Metals is 1.3 times more volatile than Lion One Metals. It trades about -0.22 of its total potential returns per unit of risk. Lion One Metals is currently generating about -0.18 per unit of volatility. If you would invest 34.00 in Lion One Metals on September 1, 2024 and sell it today you would lose (5.00) from holding Lion One Metals or give up 14.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
T2 Metals Corp vs. Lion One Metals
Performance |
| Timeline |
| T2 Metals Corp |
| Lion One Metals |
T2 Metals and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T2 Metals and Lion One
The main advantage of trading using opposite T2 Metals and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T2 Metals 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.| T2 Metals vs. First Majestic Silver | T2 Metals vs. Ivanhoe Energy | T2 Metals vs. Orezone Gold Corp | T2 Metals vs. Faraday Copper Corp |
| Lion One vs. First Majestic Silver | Lion One vs. Ivanhoe Energy | Lion One vs. Orezone Gold Corp | Lion One vs. Faraday Copper Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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