Correlation Between CleanTech Lithium and Cleveland Cliffs
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium and Cleveland Cliffs 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 CleanTech Lithium and Cleveland Cliffs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CleanTech Lithium plc and Cleveland Cliffs, you can compare the effects of market volatilities on CleanTech Lithium and Cleveland Cliffs 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 CleanTech Lithium with a short position of Cleveland Cliffs. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Cleveland Cliffs.
Diversification Opportunities for CleanTech Lithium and Cleveland Cliffs
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CleanTech and Cleveland is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Cleveland Cliffs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleveland Cliffs and CleanTech 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 CleanTech Lithium plc are associated (or correlated) with Cleveland Cliffs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleveland Cliffs has no effect on the direction of CleanTech Lithium i.e., CleanTech Lithium and Cleveland Cliffs go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Cleveland Cliffs
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to under-perform the Cleveland Cliffs. In addition to that, CleanTech Lithium is 1.84 times more volatile than Cleveland Cliffs. It trades about -0.04 of its total potential returns per unit of risk. Cleveland Cliffs is currently generating about -0.04 per unit of volatility. If you would invest 2,036 in Cleveland Cliffs on October 7, 2024 and sell it today you would lose (1,097) from holding Cleveland Cliffs or give up 53.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.01% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Cleveland Cliffs
Performance |
| Timeline |
| CleanTech Lithium plc |
| Cleveland Cliffs |
CleanTech Lithium and Cleveland Cliffs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Cleveland Cliffs
The main advantage of trading using opposite CleanTech Lithium and Cleveland Cliffs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium position performs unexpectedly, Cleveland Cliffs 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 Cleveland Cliffs will offset losses from the drop in Cleveland Cliffs' long position.| CleanTech Lithium vs. Antofagasta PLC | CleanTech Lithium vs. Atalaya Mining | CleanTech Lithium vs. Central Asia Metals | CleanTech Lithium vs. Anglo Asian Mining |
| Cleveland Cliffs vs. Vitec Software Group | Cleveland Cliffs vs. Prosiebensat 1 Media | Cleveland Cliffs vs. Liberty Media Corp | Cleveland Cliffs vs. Ubisoft Entertainment |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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