Correlation Between Employers Holdings and Lion One

Can any of the company-specific risk be diversified away by investing in both Employers Holdings 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 Employers Holdings and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Employers Holdings and Lion One Metals, you can compare the effects of market volatilities on Employers Holdings 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 Employers Holdings with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Lion One.

Diversification Opportunities for Employers Holdings and Lion One

-0.78

Correlation Coefficient

Employers Holdings  Lion One

Pay attention - limited upside

The 3 months correlation between Employers and Lion is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings 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 Employers Holdings 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 Employers Holdings 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 Employers Holdings i.e., Employers Holdings and Lion One go up and down completely randomly.

Pair Corralation between Employers Holdings and Lion One

Considering the 90-day investment horizon Employers Holdings is expected to generate 0.26 times more return on investment than Lion One. However, Employers Holdings is 3.87 times less risky than Lion One. It trades about -0.26 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.18 per unit of risk. If you would invest  5,310  in Employers Holdings on September 19, 2024 and sell it today you would lose (294.00) from holding Employers Holdings or give up 5.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Employers Holdings  vs.  Lion One Metals

Employers Holdings

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Employers Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Employers Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Employers Holdings and Lion One

The main advantage of trading using opposite Employers Holdings and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings 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.

The idea behind Employers Holdings and Lion One Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.