Correlation Between Lithium Energi and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Lithium Energi and NYSE Composite 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 NYSE Composite 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 NYSE Composite, you can compare the effects of market volatilities on Lithium Energi and NYSE Composite 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 NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Energi and NYSE Composite.
Diversification Opportunities for Lithium Energi and NYSE Composite
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lithium and NYSE is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Energi Exploration and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Lithium Energi i.e., Lithium Energi and NYSE Composite go up and down completely randomly.
Pair Corralation between Lithium Energi and NYSE Composite
Assuming the 90 days horizon Lithium Energi Exploration is expected to generate 30.7 times more return on investment than NYSE Composite. However, Lithium Energi is 30.7 times more volatile than NYSE Composite. It trades about 0.09 of its potential returns per unit of risk. NYSE Composite is currently generating about -0.06 per unit of risk. If you would invest 5.30 in Lithium Energi Exploration on February 4, 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 Against |
Strength | Insignificant |
Accuracy | 95.65% |
Values | Daily Returns |
Lithium Energi Exploration vs. NYSE Composite
Performance |
Timeline |
Lithium Energi and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Lithium Energi Exploration
Pair trading matchups for Lithium Energi
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Lithium Energi and NYSE Composite
The main advantage of trading using opposite Lithium Energi and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Energi position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Lithium Energi vs. Altius Minerals | Lithium Energi vs. EMX Royalty Corp | Lithium Energi vs. Ivanhoe Mines | Lithium Energi vs. Rio Tinto ADR |
NYSE Composite vs. The Cheesecake Factory | NYSE Composite vs. Vector Group | NYSE Composite vs. Ecolab Inc | NYSE Composite vs. Dine Brands Global |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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