Correlation Between Green Technology and Arizona Lithium
Can any of the company-specific risk be diversified away by investing in both Green Technology and Arizona 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 Green Technology and Arizona Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Technology Metals and Arizona Lithium Limited, you can compare the effects of market volatilities on Green Technology and Arizona 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 Green Technology with a short position of Arizona Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Technology and Arizona Lithium.
Diversification Opportunities for Green Technology and Arizona Lithium
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Green and Arizona is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Green Technology Metals and Arizona Lithium Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Lithium and Green Technology 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 Green Technology Metals are associated (or correlated) with Arizona Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Lithium has no effect on the direction of Green Technology i.e., Green Technology and Arizona Lithium go up and down completely randomly.
Pair Corralation between Green Technology and Arizona Lithium
Assuming the 90 days horizon Green Technology is expected to generate 2.63 times less return on investment than Arizona Lithium. In addition to that, Green Technology is 1.14 times more volatile than Arizona Lithium Limited. It trades about 0.02 of its total potential returns per unit of risk. Arizona Lithium Limited is currently generating about 0.07 per unit of volatility. If you would invest 1.44 in Arizona Lithium Limited on September 1, 2024 and sell it today you would lose (0.27) from holding Arizona Lithium Limited or give up 18.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Technology Metals vs. Arizona Lithium Limited
Performance |
| Timeline |
| Green Technology Metals |
| Arizona Lithium |
Green Technology and Arizona Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Technology and Arizona Lithium
The main advantage of trading using opposite Green Technology and Arizona Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Technology position performs unexpectedly, Arizona 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 Arizona Lithium will offset losses from the drop in Arizona Lithium's long position.| Green Technology vs. Lake Resources NL | Green Technology vs. Arizona Lithium Limited | Green Technology vs. Sayona Mining Limited | Green Technology vs. Argosy Minerals Limited |
| Arizona Lithium vs. Bushveld Minerals Limited | Arizona Lithium vs. Aurelia Metals Limited | Arizona Lithium vs. Artemis Resources | Arizona Lithium vs. Ascendant Resources |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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