Correlation Between Global Li-Ion and Patriot Battery
Can any of the company-specific risk be diversified away by investing in both Global Li-Ion and Patriot Battery 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 Global Li-Ion and Patriot Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Li Ion Graphite and Patriot Battery Metals, you can compare the effects of market volatilities on Global Li-Ion and Patriot Battery 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 Global Li-Ion with a short position of Patriot Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Li-Ion and Patriot Battery.
Diversification Opportunities for Global Li-Ion and Patriot Battery
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Patriot is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Global Li Ion Graphite and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery Metals and Global Li-Ion 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 Global Li Ion Graphite are associated (or correlated) with Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of Global Li-Ion i.e., Global Li-Ion and Patriot Battery go up and down completely randomly.
Pair Corralation between Global Li-Ion and Patriot Battery
Assuming the 90 days horizon Global Li Ion Graphite is expected to generate 6.37 times more return on investment than Patriot Battery. However, Global Li-Ion is 6.37 times more volatile than Patriot Battery Metals. It trades about -0.07 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about -0.56 per unit of risk. If you would invest 2.29 in Global Li Ion Graphite on August 29, 2024 and sell it today you would lose (1.25) from holding Global Li Ion Graphite or give up 54.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global Li Ion Graphite vs. Patriot Battery Metals
Performance |
| Timeline |
| Global Li Ion |
| Patriot Battery Metals |
Global Li-Ion and Patriot Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Li-Ion and Patriot Battery
The main advantage of trading using opposite Global Li-Ion and Patriot Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Li-Ion position performs unexpectedly, Patriot Battery 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 Patriot Battery will offset losses from the drop in Patriot Battery's long position.| Global Li-Ion vs. Nova Lithium Corp | Global Li-Ion vs. Qubec Nickel Corp | Global Li-Ion vs. SPC Nickel Corp | Global Li-Ion vs. CDN Maverick Capital |
| Patriot Battery vs. Hannan Metals | Patriot Battery vs. Aldebaran Resources | Patriot Battery vs. Leading Edge Materials | Patriot Battery vs. Atco Mining |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |