Correlation Between Hannan Metals and Core Lithium
Can any of the company-specific risk be diversified away by investing in both Hannan Metals and Core 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 Hannan Metals and Core Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannan Metals and Core Lithium, you can compare the effects of market volatilities on Hannan Metals and Core 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 Hannan Metals with a short position of Core Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannan Metals and Core Lithium.
Diversification Opportunities for Hannan Metals and Core Lithium
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hannan and Core is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hannan Metals and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium and Hannan Metals 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 Hannan Metals are associated (or correlated) with Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Hannan Metals i.e., Hannan Metals and Core Lithium go up and down completely randomly.
Pair Corralation between Hannan Metals and Core Lithium
Assuming the 90 days horizon Hannan Metals is expected to generate 0.69 times more return on investment than Core Lithium. However, Hannan Metals is 1.44 times less risky than Core Lithium. It trades about 0.28 of its potential returns per unit of risk. Core Lithium is currently generating about -0.14 per unit of risk. If you would invest 32.00 in Hannan Metals on September 1, 2024 and sell it today you would earn a total of 11.00 from holding Hannan Metals or generate 34.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannan Metals vs. Core Lithium
Performance |
| Timeline |
| Hannan Metals |
| Core Lithium |
Hannan Metals and Core Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannan Metals and Core Lithium
The main advantage of trading using opposite Hannan Metals and Core Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannan Metals position performs unexpectedly, Core 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 Core Lithium will offset losses from the drop in Core Lithium's long position.| Hannan Metals vs. Atco Mining | Hannan Metals vs. Leading Edge Materials | Hannan Metals vs. Arianne Phosphate | Hannan Metals vs. Global Battery Metals |
| Core Lithium vs. ATT Inc | Core Lithium vs. Merck Company | Core Lithium vs. Walt Disney | Core Lithium vs. Caterpillar |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |