Correlation Between Lithium Energi and Liontown Resources
Can any of the company-specific risk be diversified away by investing in both Lithium Energi and Liontown Resources 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 Lithium Energi and Liontown Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Energi Exploration and Liontown Resources Limited, you can compare the effects of market volatilities on Lithium Energi and Liontown Resources 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 Lithium Energi with a short position of Liontown Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Energi and Liontown Resources.
Diversification Opportunities for Lithium Energi and Liontown Resources
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lithium and Liontown is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Energi Exploration and Liontown Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontown Resources and Lithium Energi 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 Lithium Energi Exploration are associated (or correlated) with Liontown Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontown Resources has no effect on the direction of Lithium Energi i.e., Lithium Energi and Liontown Resources go up and down completely randomly.
Pair Corralation between Lithium Energi and Liontown Resources
Assuming the 90 days horizon Lithium Energi Exploration is expected to generate 4.51 times more return on investment than Liontown Resources. However, Lithium Energi is 4.51 times more volatile than Liontown Resources Limited. It trades about 0.09 of its potential returns per unit of risk. Liontown Resources Limited is currently generating about 0.05 per unit of risk. If you would invest 5.30 in Lithium Energi Exploration on February 5, 2024 and sell it today you would earn a total of 0.20 from holding Lithium Energi Exploration or generate 3.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lithium Energi Exploration vs. Liontown Resources Limited
Performance |
Timeline |
Lithium Energi Explo |
Liontown Resources |
Lithium Energi and Liontown Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lithium Energi and Liontown Resources
The main advantage of trading using opposite Lithium Energi and Liontown Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Energi position performs unexpectedly, Liontown Resources 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 Liontown Resources will offset losses from the drop in Liontown Resources' long position.Lithium Energi vs. Centaurus Metals Limited | Lithium Energi vs. Ardea Resources Limited | Lithium Energi vs. Edison Cobalt Corp | Lithium Energi vs. Canada Silver Cobalt |
Liontown Resources vs. Centaurus Metals Limited | Liontown Resources vs. Ardea Resources Limited | Liontown Resources vs. Edison Cobalt Corp | Liontown Resources vs. Canada Silver Cobalt |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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