Correlation Between Stans Energy and International Lithium
Can any of the company-specific risk be diversified away by investing in both Stans Energy and International 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 Stans Energy and International Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stans Energy Corp and International Lithium Corp, you can compare the effects of market volatilities on Stans Energy and International 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 Stans Energy with a short position of International Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stans Energy and International Lithium.
Diversification Opportunities for Stans Energy and International Lithium
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stans and International is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Stans Energy Corp and International Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Lithium and Stans Energy 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 Stans Energy Corp are associated (or correlated) with International Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Lithium has no effect on the direction of Stans Energy i.e., Stans Energy and International Lithium go up and down completely randomly.
Pair Corralation between Stans Energy and International Lithium
Assuming the 90 days horizon Stans Energy Corp is expected to under-perform the International Lithium. In addition to that, Stans Energy is 3.94 times more volatile than International Lithium Corp. It trades about -0.24 of its total potential returns per unit of risk. International Lithium Corp is currently generating about -0.04 per unit of volatility. If you would invest 1.10 in International Lithium Corp on October 26, 2024 and sell it today you would lose (0.07) from holding International Lithium Corp or give up 6.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stans Energy Corp vs. International Lithium Corp
Performance |
| Timeline |
| Stans Energy Corp |
| International Lithium |
Stans Energy and International Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stans Energy and International Lithium
The main advantage of trading using opposite Stans Energy and International Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stans Energy position performs unexpectedly, International 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 International Lithium will offset losses from the drop in International Lithium's long position.| Stans Energy vs. Ridgestone Mining | Stans Energy vs. Lion Copper and | Stans Energy vs. FPX Nickel Corp | Stans Energy vs. Focus Graphite |
| International Lithium vs. Decade Resources | International Lithium vs. Silver Spruce Resources | International Lithium vs. Grid Metals Corp | International Lithium vs. Canada Rare Earth |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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