Correlation Between Core Lithium and Sigma Lithium
Can any of the company-specific risk be diversified away by investing in both Core Lithium and Sigma 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 Core Lithium and Sigma Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Lithium and Sigma Lithium Resources, you can compare the effects of market volatilities on Core Lithium and Sigma 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 Core Lithium with a short position of Sigma Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Lithium and Sigma Lithium.
Diversification Opportunities for Core Lithium and Sigma Lithium
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Core and Sigma is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Core Lithium and Sigma Lithium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigma Lithium Resources 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 Sigma Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigma Lithium Resources has no effect on the direction of Core Lithium i.e., Core Lithium and Sigma Lithium go up and down completely randomly.
Pair Corralation between Core Lithium and Sigma Lithium
Assuming the 90 days horizon Core Lithium is expected to under-perform the Sigma Lithium. In addition to that, Core Lithium is 3.19 times more volatile than Sigma Lithium Resources. It trades about -0.02 of its total potential returns per unit of risk. Sigma Lithium Resources is currently generating about -0.04 per unit of volatility. If you would invest 1,335 in Sigma Lithium Resources on September 13, 2024 and sell it today you would lose (117.00) from holding Sigma Lithium Resources or give up 8.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Lithium vs. Sigma Lithium Resources
Performance |
| Timeline |
| Core Lithium |
| Sigma Lithium Resources |
Core Lithium and Sigma Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Lithium and Sigma Lithium
The main advantage of trading using opposite Core Lithium and Sigma Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Lithium position performs unexpectedly, Sigma 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 Sigma Lithium will offset losses from the drop in Sigma Lithium's long position.| Core Lithium vs. Qubec Nickel Corp | Core Lithium vs. IGO Limited | Core Lithium vs. Focus Graphite | Core Lithium vs. Mineral Res |
| Sigma Lithium vs. Piedmont Lithium Ltd | Sigma Lithium vs. Standard Lithium | Sigma Lithium vs. MP Materials Corp | Sigma Lithium vs. Vale SA ADR |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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