Correlation Between Green Technology and Critical Elements
Can any of the company-specific risk be diversified away by investing in both Green Technology and Critical Elements 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 Critical Elements 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 Critical Elements, you can compare the effects of market volatilities on Green Technology and Critical Elements 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 Critical Elements. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Technology and Critical Elements.
Diversification Opportunities for Green Technology and Critical Elements
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Green and Critical is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Green Technology Metals and Critical Elements in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Elements 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 Critical Elements. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Elements has no effect on the direction of Green Technology i.e., Green Technology and Critical Elements go up and down completely randomly.
Pair Corralation between Green Technology and Critical Elements
Assuming the 90 days horizon Green Technology Metals is expected to under-perform the Critical Elements. But the pink sheet apears to be less risky and, when comparing its historical volatility, Green Technology Metals is 1.37 times less risky than Critical Elements. The pink sheet trades about -0.44 of its potential returns per unit of risk. The Critical Elements is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 37.00 in Critical Elements on August 25, 2024 and sell it today you would lose (4.00) from holding Critical Elements or give up 10.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Technology Metals vs. Critical Elements
Performance |
| Timeline |
| Green Technology Metals |
| Critical Elements |
Green Technology and Critical Elements Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Technology and Critical Elements
The main advantage of trading using opposite Green Technology and Critical Elements positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Technology position performs unexpectedly, Critical Elements 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 Critical Elements will offset losses from the drop in Critical Elements' 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 |
| Critical Elements vs. Ascendant Resources | Critical Elements vs. Cantex Mine Development | Critical Elements vs. Amarc Resources | Critical Elements vs. Sterling Metals 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 CEOs Directory module to screen CEOs from public companies around the world.
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