Correlation Between 437076BK7 and Lion One

Can any of the company-specific risk be diversified away by investing in both 437076BK7 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 437076BK7 and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HOME DEPOT INC and Lion One Metals, you can compare the effects of market volatilities on 437076BK7 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 437076BK7 with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of 437076BK7 and Lion One.

Diversification Opportunities for 437076BK7 and Lion One

0.49

Correlation Coefficient

437076BK7  Lion One

Very weak diversification

The 3 months correlation between 437076BK7 and Lion is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT INC 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 437076BK7 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 HOME DEPOT INC 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 437076BK7 i.e., 437076BK7 and Lion One go up and down completely randomly.

Pair Corralation between 437076BK7 and Lion One

Assuming the 90 days trading horizon HOME DEPOT INC is expected to generate 0.07 times more return on investment than Lion One. However, HOME DEPOT INC is 14.11 times less risky than Lion One. It trades about -0.12 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.09 per unit of risk. If you would invest  9,922  in HOME DEPOT INC on September 13, 2024 and sell it today you would lose (145.00) from holding HOME DEPOT INC or give up 1.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

HOME DEPOT INC  vs.  Lion One Metals

HOME DEPOT INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOME DEPOT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 437076BK7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 abnormal 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.

Pair Trading with 437076BK7 and Lion One

The main advantage of trading using opposite 437076BK7 and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 437076BK7 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 HOME DEPOT INC 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 Transaction History module to view history of all your transactions and understand their impact on performance.