Correlation Between LION ONE and Metro AG
Can any of the company-specific risk be diversified away by investing in both LION ONE and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on LION ONE and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Metro AG.
Diversification Opportunities for LION ONE and Metro AG
Modest diversification
The 3 months correlation between LION and Metro is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of LION ONE i.e., LION ONE and Metro AG go up and down completely randomly.
Pair Corralation between LION ONE and Metro AG
Assuming the 90 days trading horizon LION ONE METALS is expected to generate 3.47 times more return on investment than Metro AG. However, LION ONE is 3.47 times more volatile than Metro AG. It trades about -0.01 of its potential returns per unit of risk. Metro AG is currently generating about -0.08 per unit of risk. If you would invest 20.00 in LION ONE METALS on September 22, 2024 and sell it today you would lose (1.00) from holding LION ONE METALS or give up 5.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LION ONE METALS vs. Metro AG
Performance |
Timeline |
LION ONE METALS |
Metro AG |
LION ONE and Metro AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LION ONE and Metro AG
The main advantage of trading using opposite LION ONE and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.LION ONE vs. American Eagle Outfitters | LION ONE vs. Siamgas And Petrochemicals | LION ONE vs. Scandinavian Tobacco Group | LION ONE vs. Japan Tobacco |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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