Correlation Between Lion One and First National

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

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

Diversification Opportunities for Lion One and First National

-0.78

Correlation Coefficient

Lion One  First National

Pay attention - limited upside

The 3 months correlation between Lion and First is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial and Lion One 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 Lion One Metals are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of Lion One i.e., Lion One and First National go up and down completely randomly.

Pair Corralation between Lion One and First National

Assuming the 90 days horizon Lion One Metals is expected to under-perform the First National. In addition to that, Lion One is 2.82 times more volatile than First National Financial. It trades about -0.03 of its total potential returns per unit of risk. First National Financial is currently generating about 0.02 per unit of volatility. If you would invest  1,457  in First National Financial on October 23, 2024 and sell it today you would earn a total of  24.00  from holding First National Financial or generate 1.65% return on investment over 90 days.

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

Lion One Metals  vs.  First National Financial

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.

First National Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, First National is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lion One and First National

The main advantage of trading using opposite Lion One and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.

The idea behind Lion One Metals and First National Financial 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 Transaction History module to view history of all your transactions and understand their impact on performance.