Correlation Between Nicola Mining and Piedmont Lithium
Can any of the company-specific risk be diversified away by investing in both Nicola Mining and Piedmont 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 Nicola Mining and Piedmont Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nicola Mining and Piedmont Lithium Ltd, you can compare the effects of market volatilities on Nicola Mining and Piedmont 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 Nicola Mining with a short position of Piedmont Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicola Mining and Piedmont Lithium.
Diversification Opportunities for Nicola Mining and Piedmont Lithium
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nicola and Piedmont is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and Piedmont Lithium Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piedmont Lithium and Nicola Mining 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 Nicola Mining are associated (or correlated) with Piedmont Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piedmont Lithium has no effect on the direction of Nicola Mining i.e., Nicola Mining and Piedmont Lithium go up and down completely randomly.
Pair Corralation between Nicola Mining and Piedmont Lithium
Assuming the 90 days horizon Nicola Mining is expected to generate 4.91 times less return on investment than Piedmont Lithium. But when comparing it to its historical volatility, Nicola Mining is 1.4 times less risky than Piedmont Lithium. It trades about 0.01 of its potential returns per unit of risk. Piedmont Lithium Ltd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 881.00 in Piedmont Lithium Ltd on October 29, 2024 and sell it today you would earn a total of 12.00 from holding Piedmont Lithium Ltd or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 50.0% |
| Values | Daily Returns |
Nicola Mining vs. Piedmont Lithium Ltd
Performance |
| Timeline |
| Nicola Mining |
| Piedmont Lithium |
Nicola Mining and Piedmont Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nicola Mining and Piedmont Lithium
The main advantage of trading using opposite Nicola Mining and Piedmont Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nicola Mining position performs unexpectedly, Piedmont 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 Piedmont Lithium will offset losses from the drop in Piedmont Lithium's long position.| Nicola Mining vs. Hannan Metals | Nicola Mining vs. Atco Mining | Nicola Mining vs. Leading Edge Materials | Nicola Mining vs. Arianne Phosphate |
| Piedmont Lithium vs. Sigma Lithium Resources | Piedmont Lithium vs. Standard Lithium | Piedmont Lithium vs. MP Materials Corp | Piedmont Lithium vs. Vale SA 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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