Correlation Between CanAlaska Uranium and Lithium Australia
Can any of the company-specific risk be diversified away by investing in both CanAlaska Uranium and Lithium Australia 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 CanAlaska Uranium and Lithium Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CanAlaska Uranium and Lithium Australia NL, you can compare the effects of market volatilities on CanAlaska Uranium and Lithium Australia 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 CanAlaska Uranium with a short position of Lithium Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of CanAlaska Uranium and Lithium Australia.
Diversification Opportunities for CanAlaska Uranium and Lithium Australia
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between CanAlaska and Lithium is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CanAlaska Uranium and Lithium Australia NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Australia and CanAlaska Uranium 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 CanAlaska Uranium are associated (or correlated) with Lithium Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Australia has no effect on the direction of CanAlaska Uranium i.e., CanAlaska Uranium and Lithium Australia go up and down completely randomly.
Pair Corralation between CanAlaska Uranium and Lithium Australia
Assuming the 90 days horizon CanAlaska Uranium is expected to generate 67.24 times less return on investment than Lithium Australia. But when comparing it to its historical volatility, CanAlaska Uranium is 34.11 times less risky than Lithium Australia. It trades about 0.06 of its potential returns per unit of risk. Lithium Australia NL is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.79 in Lithium Australia NL on August 29, 2024 and sell it today you would earn a total of 0.36 from holding Lithium Australia NL or generate 45.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
CanAlaska Uranium vs. Lithium Australia NL
Performance |
| Timeline |
| CanAlaska Uranium |
| Lithium Australia |
CanAlaska Uranium and Lithium Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CanAlaska Uranium and Lithium Australia
The main advantage of trading using opposite CanAlaska Uranium and Lithium Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CanAlaska Uranium position performs unexpectedly, Lithium Australia 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 Lithium Australia will offset losses from the drop in Lithium Australia's long position.| CanAlaska Uranium vs. Forum Energy Metals | CanAlaska Uranium vs. Namibia Critical Metals | CanAlaska Uranium vs. Themac Resources Group | CanAlaska Uranium vs. Pasinex Resources Limited |
| Lithium Australia vs. Grid Metals Corp | Lithium Australia vs. Latin Metals | Lithium Australia vs. First American Silver | Lithium Australia vs. IGO Limited |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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