Correlation Between US Financial and Lion One

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

By analyzing existing cross correlation between US Financial 15 and Lion One Metals, you can compare the effects of market volatilities on US Financial 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 US Financial with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Lion One.

Diversification Opportunities for US Financial and Lion One

-0.58

Correlation Coefficient

US Financial  Lion One

Excellent diversification

The 3 months correlation between FTU and Lion is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 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 US Financial 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 US Financial 15 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 US Financial i.e., US Financial and Lion One go up and down completely randomly.

Pair Corralation between US Financial and Lion One

Assuming the 90 days trading horizon US Financial 15 is expected to generate 1.74 times more return on investment than Lion One. However, US Financial is 1.74 times more volatile than Lion One Metals. It trades about 0.08 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.03 per unit of risk. If you would invest  40.00  in US Financial 15 on October 7, 2024 and sell it today you would earn a total of  7.00  from holding US Financial 15 or generate 17.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

US Financial 15  vs.  Lion One Metals

US Financial 15

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in US Financial 15 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, US Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with US Financial and Lion One

The main advantage of trading using opposite US Financial and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Financial 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 US Financial 15 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.