Correlation Between Euro Manganese and Core Lithium
Can any of the company-specific risk be diversified away by investing in both Euro Manganese and Core 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 Euro Manganese and Core Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euro Manganese and Core Lithium, you can compare the effects of market volatilities on Euro Manganese and Core 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 Euro Manganese with a short position of Core Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euro Manganese and Core Lithium.
Diversification Opportunities for Euro Manganese and Core Lithium
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Euro and Core is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Euro Manganese and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium and Euro Manganese 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 Euro Manganese are associated (or correlated) with Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Euro Manganese i.e., Euro Manganese and Core Lithium go up and down completely randomly.
Pair Corralation between Euro Manganese and Core Lithium
Assuming the 90 days horizon Euro Manganese is expected to under-perform the Core Lithium. But the otc stock apears to be less risky and, when comparing its historical volatility, Euro Manganese is 1.28 times less risky than Core Lithium. The otc stock trades about -0.33 of its potential returns per unit of risk. The Core Lithium is currently generating about -0.14 of returns per unit of risk over similar time horizon. 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 |
Euro Manganese vs. Core Lithium
Performance |
| Timeline |
| Euro Manganese |
| Core Lithium |
Euro Manganese and Core Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Euro Manganese and Core Lithium
The main advantage of trading using opposite Euro Manganese and Core Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euro Manganese position performs unexpectedly, Core 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 Core Lithium will offset losses from the drop in Core Lithium's long position.| Euro Manganese vs. Bravada Gold | Euro Manganese vs. Silver Spruce Resources | Euro Manganese vs. Monitor Ventures | Euro Manganese vs. Pershing Resources |
| Core Lithium vs. ATT Inc | Core Lithium vs. Merck Company | Core Lithium vs. Walt Disney | Core Lithium 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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