Correlation Between FPX Nickel and Lithium Corp
Can any of the company-specific risk be diversified away by investing in both FPX Nickel and Lithium Corp 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 Lithium Corp 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 Lithium Corp, you can compare the effects of market volatilities on FPX Nickel and Lithium Corp 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 Lithium Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPX Nickel and Lithium Corp.
Diversification Opportunities for FPX Nickel and Lithium Corp
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FPX and Lithium is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding FPX Nickel Corp and Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Corp 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 Lithium Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Corp has no effect on the direction of FPX Nickel i.e., FPX Nickel and Lithium Corp go up and down completely randomly.
Pair Corralation between FPX Nickel and Lithium Corp
Assuming the 90 days horizon FPX Nickel Corp is expected to generate 0.72 times more return on investment than Lithium Corp. However, FPX Nickel Corp is 1.39 times less risky than Lithium Corp. It trades about 0.02 of its potential returns per unit of risk. Lithium Corp is currently generating about -0.11 per unit of risk. If you would invest 16.00 in FPX Nickel Corp on December 1, 2024 and sell it today you would earn a total of 0.00 from holding FPX Nickel Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
FPX Nickel Corp vs. Lithium Corp
Performance |
| Timeline |
| FPX Nickel Corp |
| Lithium Corp |
FPX Nickel and Lithium Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FPX Nickel and Lithium Corp
The main advantage of trading using opposite FPX Nickel and Lithium Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FPX Nickel position performs unexpectedly, Lithium Corp 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 Lithium Corp will offset losses from the drop in Lithium Corp'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 |
| Lithium Corp vs. Altura Mining Limited | Lithium Corp vs. Frontier Lithium | Lithium Corp vs. Savannah Resources Plc | Lithium Corp vs. Lithium Ionic Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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