Correlation Between Lion One and Mayfair Gold

Can any of the company-specific risk be diversified away by investing in both Lion One and Mayfair Gold 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 Mayfair Gold 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 Mayfair Gold Corp, you can compare the effects of market volatilities on Lion One and Mayfair Gold 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 Mayfair Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Mayfair Gold.

Diversification Opportunities for Lion One and Mayfair Gold

0.7

Correlation Coefficient

Lion One  Mayfair Gold

Poor diversification

The 3 months correlation between Lion and Mayfair is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Mayfair Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfair Gold Corp 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 Mayfair Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfair Gold Corp has no effect on the direction of Lion One i.e., Lion One and Mayfair Gold go up and down completely randomly.

Pair Corralation between Lion One and Mayfair Gold

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Mayfair Gold. In addition to that, Lion One is 1.34 times more volatile than Mayfair Gold Corp. It trades about -0.29 of its total potential returns per unit of risk. Mayfair Gold Corp is currently generating about -0.19 per unit of volatility. If you would invest  152.00  in Mayfair Gold Corp on September 26, 2024 and sell it today you would lose (29.00) from holding Mayfair Gold Corp or give up 19.08% of portfolio value over 90 days.

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

Lion One Metals  vs.  Mayfair Gold Corp

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 fragile 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.

Mayfair Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mayfair Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental 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 Lion One and Mayfair Gold

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

The idea behind Lion One Metals and Mayfair Gold Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.