Correlation Between FPX Nickel and Frontier Lithium
Can any of the company-specific risk be diversified away by investing in both FPX Nickel and Frontier 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 FPX Nickel and Frontier Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FPX Nickel Corp and Frontier Lithium, you can compare the effects of market volatilities on FPX Nickel and Frontier 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 FPX Nickel with a short position of Frontier Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPX Nickel and Frontier Lithium.
Diversification Opportunities for FPX Nickel and Frontier Lithium
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FPX and Frontier is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding FPX Nickel Corp and Frontier Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Lithium and FPX Nickel 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 FPX Nickel Corp are associated (or correlated) with Frontier Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Lithium has no effect on the direction of FPX Nickel i.e., FPX Nickel and Frontier Lithium go up and down completely randomly.
Pair Corralation between FPX Nickel and Frontier Lithium
Assuming the 90 days horizon FPX Nickel Corp is expected to generate 0.97 times more return on investment than Frontier Lithium. However, FPX Nickel Corp is 1.03 times less risky than Frontier Lithium. It trades about -0.01 of its potential returns per unit of risk. Frontier Lithium is currently generating about -0.04 per unit of risk. If you would invest 34.00 in FPX Nickel Corp on August 29, 2024 and sell it today you would lose (16.00) from holding FPX Nickel Corp or give up 47.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FPX Nickel Corp vs. Frontier Lithium
Performance |
| Timeline |
| FPX Nickel Corp |
| Frontier Lithium |
FPX Nickel and Frontier Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FPX Nickel and Frontier Lithium
The main advantage of trading using opposite FPX Nickel and Frontier Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FPX Nickel position performs unexpectedly, Frontier 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 Frontier Lithium will offset losses from the drop in Frontier Lithium's long position.| FPX Nickel vs. Oroco Resource Corp | FPX Nickel vs. Syrah Resources Limited | FPX Nickel vs. Graphite One | FPX Nickel vs. Westwater Resources |
| Frontier Lithium vs. Vision Lithium | Frontier Lithium vs. Critical Elements | Frontier Lithium vs. Cypress Development Corp | Frontier Lithium vs. Core Lithium |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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