Correlation Between Core Lithium and Altiplano Metals
Can any of the company-specific risk be diversified away by investing in both Core Lithium and Altiplano Metals 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 Core Lithium and Altiplano Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Lithium and Altiplano Metals, you can compare the effects of market volatilities on Core Lithium and Altiplano Metals 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 Core Lithium with a short position of Altiplano Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Lithium and Altiplano Metals.
Diversification Opportunities for Core Lithium and Altiplano Metals
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Core and Altiplano is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Core Lithium and Altiplano Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altiplano Metals and Core 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 Core Lithium are associated (or correlated) with Altiplano Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altiplano Metals has no effect on the direction of Core Lithium i.e., Core Lithium and Altiplano Metals go up and down completely randomly.
Pair Corralation between Core Lithium and Altiplano Metals
Assuming the 90 days horizon Core Lithium is expected to generate 0.99 times more return on investment than Altiplano Metals. However, Core Lithium is 1.01 times less risky than Altiplano Metals. It trades about -0.14 of its potential returns per unit of risk. Altiplano Metals is currently generating about -0.16 per unit of risk. If you would invest 8.33 in Core Lithium on September 1, 2024 and sell it today you would lose (2.13) from holding Core Lithium or give up 25.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Lithium vs. Altiplano Metals
Performance |
| Timeline |
| Core Lithium |
| Altiplano Metals |
Core Lithium and Altiplano Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Lithium and Altiplano Metals
The main advantage of trading using opposite Core Lithium and Altiplano Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Lithium position performs unexpectedly, Altiplano Metals 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 Altiplano Metals will offset losses from the drop in Altiplano Metals' long position.| Core Lithium vs. ATT Inc | Core Lithium vs. Merck Company | Core Lithium vs. Walt Disney | Core Lithium vs. Caterpillar |
| Altiplano Metals vs. ATT Inc | Altiplano Metals vs. Merck Company | Altiplano Metals vs. Walt Disney | Altiplano Metals vs. Caterpillar |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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