Correlation Between Lion Financial and Riot Blockchain

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

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

Diversification Opportunities for Lion Financial and Riot Blockchain

0.11

Correlation Coefficient

Lion Financial  Riot Blockchain

Average diversification

The 3 months correlation between Lion and Riot is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group and Riot Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riot Blockchain and Lion 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 Lion Financial Group are associated (or correlated) with Riot Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riot Blockchain has no effect on the direction of Lion Financial i.e., Lion Financial and Riot Blockchain go up and down completely randomly.

Pair Corralation between Lion Financial and Riot Blockchain

Assuming the 90 days horizon Lion Financial is expected to generate 2.05 times less return on investment than Riot Blockchain. In addition to that, Lion Financial is 1.1 times more volatile than Riot Blockchain. It trades about 0.09 of its total potential returns per unit of risk. Riot Blockchain is currently generating about 0.19 per unit of volatility. If you would invest  678.00  in Riot Blockchain on September 3, 2024 and sell it today you would earn a total of  587.00  from holding Riot Blockchain or generate 86.58% return on investment over 90 days.

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

Lion Financial Group  vs.  Riot Blockchain

Lion Financial Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lion Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Lion Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Riot Blockchain

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Lion Financial and Riot Blockchain

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

The idea behind Lion Financial Group and Riot Blockchain 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.