Correlation Between Arizona Lithium and EMX Royalty
Can any of the company-specific risk be diversified away by investing in both Arizona Lithium and EMX Royalty 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 Arizona Lithium and EMX Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arizona Lithium Limited and EMX Royalty Corp, you can compare the effects of market volatilities on Arizona Lithium and EMX Royalty 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 Arizona Lithium with a short position of EMX Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Lithium and EMX Royalty.
Diversification Opportunities for Arizona Lithium and EMX Royalty
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Arizona and EMX is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Lithium Limited and EMX Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMX Royalty Corp and Arizona 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 Arizona Lithium Limited are associated (or correlated) with EMX Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMX Royalty Corp has no effect on the direction of Arizona Lithium i.e., Arizona Lithium and EMX Royalty go up and down completely randomly.
Pair Corralation between Arizona Lithium and EMX Royalty
Assuming the 90 days horizon Arizona Lithium Limited is expected to generate 6.63 times more return on investment than EMX Royalty. However, Arizona Lithium is 6.63 times more volatile than EMX Royalty Corp. It trades about 0.05 of its potential returns per unit of risk. EMX Royalty Corp is currently generating about 0.01 per unit of risk. If you would invest 4.60 in Arizona Lithium Limited on September 4, 2024 and sell it today you would lose (3.43) from holding Arizona Lithium Limited or give up 74.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Arizona Lithium Limited vs. EMX Royalty Corp
Performance |
| Timeline |
| Arizona Lithium |
| EMX Royalty Corp |
Arizona Lithium and EMX Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arizona Lithium and EMX Royalty
The main advantage of trading using opposite Arizona Lithium and EMX Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arizona Lithium position performs unexpectedly, EMX Royalty 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 EMX Royalty will offset losses from the drop in EMX Royalty's long position.| Arizona Lithium vs. Bushveld Minerals Limited | Arizona Lithium vs. Aurelia Metals Limited | Arizona Lithium vs. Artemis Resources | Arizona Lithium vs. Ascendant Resources |
| EMX Royalty vs. Qubec Nickel Corp | EMX Royalty vs. American Rare Earths | EMX Royalty vs. Cypress Development Corp | EMX Royalty vs. Jervois Mining |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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