Correlation Between International Lithium and Avarone Metals
Can any of the company-specific risk be diversified away by investing in both International Lithium and Avarone Metals 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 International Lithium and Avarone Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Lithium Corp and Avarone Metals, you can compare the effects of market volatilities on International Lithium and Avarone Metals 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 International Lithium with a short position of Avarone Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Lithium and Avarone Metals.
Diversification Opportunities for International Lithium and Avarone Metals
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Avarone is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding International Lithium Corp and Avarone Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avarone Metals and International Lithium 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 International Lithium Corp are associated (or correlated) with Avarone Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avarone Metals has no effect on the direction of International Lithium i.e., International Lithium and Avarone Metals go up and down completely randomly.
Pair Corralation between International Lithium and Avarone Metals
Assuming the 90 days horizon International Lithium is expected to generate 7.43 times less return on investment than Avarone Metals. But when comparing it to its historical volatility, International Lithium Corp is 1.8 times less risky than Avarone Metals. It trades about 0.01 of its potential returns per unit of risk. Avarone Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.90 in Avarone Metals on August 29, 2024 and sell it today you would lose (0.57) from holding Avarone Metals or give up 63.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Lithium Corp vs. Avarone Metals
Performance |
| Timeline |
| International Lithium |
| Avarone Metals |
International Lithium and Avarone Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Lithium and Avarone Metals
The main advantage of trading using opposite International Lithium and Avarone Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Lithium position performs unexpectedly, Avarone Metals 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 Avarone Metals will offset losses from the drop in Avarone Metals' long position.| International Lithium vs. Rockridge Resources | International Lithium vs. Ameriwest Lithium | International Lithium vs. Osisko Metals Incorporated | International Lithium vs. Volt Lithium Corp |
| Avarone Metals vs. Silver Hammer Mining | Avarone Metals vs. Reyna Silver Corp | Avarone Metals vs. Guanajuato Silver | Avarone Metals vs. Silver One 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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