Correlation Between BCM Resources and Nova Lithium
Can any of the company-specific risk be diversified away by investing in both BCM Resources and Nova Lithium 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 BCM Resources and Nova Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCM Resources and Nova Lithium Corp, you can compare the effects of market volatilities on BCM Resources and Nova Lithium 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 BCM Resources with a short position of Nova Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCM Resources and Nova Lithium.
Diversification Opportunities for BCM Resources and Nova Lithium
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between BCM and Nova is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding BCM Resources and Nova Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Lithium Corp and BCM Resources 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 BCM Resources are associated (or correlated) with Nova Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Lithium Corp has no effect on the direction of BCM Resources i.e., BCM Resources and Nova Lithium go up and down completely randomly.
Pair Corralation between BCM Resources and Nova Lithium
Assuming the 90 days horizon BCM Resources is expected to generate 33.65 times less return on investment than Nova Lithium. But when comparing it to its historical volatility, BCM Resources is 3.78 times less risky than Nova Lithium. It trades about 0.01 of its potential returns per unit of risk. Nova Lithium Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Nova Lithium Corp on November 28, 2024 and sell it today you would lose (8.00) from holding Nova Lithium Corp or give up 30.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.95% |
| Values | Daily Returns |
BCM Resources vs. Nova Lithium Corp
Performance |
| Timeline |
| BCM Resources |
| Nova Lithium Corp |
BCM Resources and Nova Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCM Resources and Nova Lithium
The main advantage of trading using opposite BCM Resources and Nova Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCM Resources position performs unexpectedly, Nova Lithium 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 Nova Lithium will offset losses from the drop in Nova Lithium's long position.| BCM Resources vs. Edison Cobalt Corp | BCM Resources vs. Champion Bear Resources | BCM Resources vs. Avarone Metals | BCM Resources vs. Adriatic Metals PLC |
| Nova Lithium vs. Teleflex Incorporated | Nova Lithium vs. Hudson Technologies | Nova Lithium vs. PPG Industries | Nova Lithium vs. Ecolab Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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