Correlation Between Filo Mining and Sigma Lithium
Can any of the company-specific risk be diversified away by investing in both Filo Mining 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 Filo Mining and Sigma Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Filo Mining Corp and Sigma Lithium Resources, you can compare the effects of market volatilities on Filo Mining 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 Filo Mining with a short position of Sigma Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Filo Mining and Sigma Lithium.
Diversification Opportunities for Filo Mining and Sigma Lithium
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Filo and Sigma is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Filo Mining Corp 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 Filo Mining 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 Filo Mining Corp 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 Filo Mining i.e., Filo Mining and Sigma Lithium go up and down completely randomly.
Pair Corralation between Filo Mining and Sigma Lithium
Assuming the 90 days horizon Filo Mining Corp is expected to generate 0.5 times more return on investment than Sigma Lithium. However, Filo Mining Corp is 2.02 times less risky than Sigma Lithium. It trades about 0.1 of its potential returns per unit of risk. Sigma Lithium Resources is currently generating about -0.02 per unit of risk. If you would invest 1,884 in Filo Mining Corp on August 25, 2024 and sell it today you would earn a total of 448.00 from holding Filo Mining Corp or generate 23.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Filo Mining Corp vs. Sigma Lithium Resources
Performance |
| Timeline |
| Filo Mining Corp |
| Sigma Lithium Resources |
Filo Mining and Sigma Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Filo Mining and Sigma Lithium
The main advantage of trading using opposite Filo Mining and Sigma Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Filo Mining 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.| Filo Mining vs. Lotus Resources Limited | Filo Mining vs. Golden Goliath Resources | Filo Mining vs. Stria Lithium | Filo Mining vs. Monitor Ventures |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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