Correlation Between Sigma Lithium and Ioneer

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

By analyzing existing cross correlation between Sigma Lithium Resources and ioneer, you can compare the effects of market volatilities on Sigma Lithium and Ioneer 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 Sigma Lithium with a short position of Ioneer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Lithium and Ioneer.

Diversification Opportunities for Sigma Lithium and Ioneer

0.63

Correlation Coefficient

Sigma Lithium  Ioneer

Poor diversification

The 3 months correlation between Sigma and Ioneer is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Lithium Resources and ioneer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ioneer and Sigma Lithium 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 Sigma Lithium Resources are associated (or correlated) with Ioneer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ioneer has no effect on the direction of Sigma Lithium i.e., Sigma Lithium and Ioneer go up and down completely randomly.

Pair Corralation between Sigma Lithium and Ioneer

Given the investment horizon of 90 days Sigma Lithium Resources is expected to generate 0.78 times more return on investment than Ioneer. However, Sigma Lithium Resources is 1.29 times less risky than Ioneer. It trades about 0.05 of its potential returns per unit of risk. ioneer is currently generating about -0.01 per unit of risk. If you would invest  599.00  in Sigma Lithium Resources on May 18, 2025 and sell it today you would earn a total of  41.00  from holding Sigma Lithium Resources or generate 6.84% return on investment over 90 days.

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

Sigma Lithium Resources  vs.  ioneer

Sigma Lithium Resources

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Sigma Lithium Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady primary indicators, Sigma Lithium disclosed solid returns over the last few months and may actually be approaching a breakup point.

ioneer

Risk-Adjusted Performance

Weakest

Over the last 90 days ioneer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Ioneer is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sigma Lithium and Ioneer

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

The idea behind Sigma Lithium Resources and ioneer 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.

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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.