Correlation Between GR Silver and Liontown Resources
Can any of the company-specific risk be diversified away by investing in both GR Silver and Liontown Resources 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 GR Silver and Liontown Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GR Silver Mining and Liontown Resources Limited, you can compare the effects of market volatilities on GR Silver and Liontown Resources 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 GR Silver with a short position of Liontown Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GR Silver and Liontown Resources.
Diversification Opportunities for GR Silver and Liontown Resources
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GRSLF and Liontown is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GR Silver Mining and Liontown Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontown Resources and GR Silver 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 GR Silver Mining are associated (or correlated) with Liontown Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontown Resources has no effect on the direction of GR Silver i.e., GR Silver and Liontown Resources go up and down completely randomly.
Pair Corralation between GR Silver and Liontown Resources
Assuming the 90 days horizon GR Silver Mining is expected to generate 1.19 times more return on investment than Liontown Resources. However, GR Silver is 1.19 times more volatile than Liontown Resources Limited. It trades about 0.04 of its potential returns per unit of risk. Liontown Resources Limited is currently generating about 0.0 per unit of risk. If you would invest 11.00 in GR Silver Mining on September 2, 2024 and sell it today you would earn a total of 3.00 from holding GR Silver Mining or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GR Silver Mining vs. Liontown Resources Limited
Performance |
| Timeline |
| GR Silver Mining |
| Liontown Resources |
GR Silver and Liontown Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GR Silver and Liontown Resources
The main advantage of trading using opposite GR Silver and Liontown Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GR Silver position performs unexpectedly, Liontown Resources 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 Liontown Resources will offset losses from the drop in Liontown Resources' long position.The idea behind GR Silver Mining and Liontown Resources Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Liontown Resources vs. Sayona Mining Limited | Liontown Resources vs. Core Lithium | Liontown Resources vs. Critical Elements | Liontown Resources vs. South32 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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