Correlation Between International Lithium and Wealth Minerals
Can any of the company-specific risk be diversified away by investing in both International Lithium and Wealth Minerals 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 Wealth Minerals 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 Wealth Minerals, you can compare the effects of market volatilities on International Lithium and Wealth Minerals 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 Wealth Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Lithium and Wealth Minerals.
Diversification Opportunities for International Lithium and Wealth Minerals
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Wealth is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding International Lithium Corp and Wealth Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wealth Minerals 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 Wealth Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wealth Minerals has no effect on the direction of International Lithium i.e., International Lithium and Wealth Minerals go up and down completely randomly.
Pair Corralation between International Lithium and Wealth Minerals
Assuming the 90 days horizon International Lithium Corp is expected to generate 1.08 times more return on investment than Wealth Minerals. However, International Lithium is 1.08 times more volatile than Wealth Minerals. It trades about 0.05 of its potential returns per unit of risk. Wealth Minerals is currently generating about -0.1 per unit of risk. If you would invest 1.10 in International Lithium Corp on August 29, 2024 and sell it today you would lose (0.02) from holding International Lithium Corp or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
International Lithium Corp vs. Wealth Minerals
Performance |
| Timeline |
| International Lithium |
| Wealth Minerals |
International Lithium and Wealth Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Lithium and Wealth Minerals
The main advantage of trading using opposite International Lithium and Wealth Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Lithium position performs unexpectedly, Wealth Minerals 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 Wealth Minerals will offset losses from the drop in Wealth Minerals' long position.| International Lithium vs. Rockridge Resources | International Lithium vs. Ameriwest Lithium | International Lithium vs. Osisko Metals Incorporated | International Lithium vs. Volt Lithium Corp |
| Wealth Minerals vs. Grupo Mxico SAB | Wealth Minerals vs. Rio Tinto ADR | Wealth Minerals vs. First American Silver | Wealth Minerals vs. GoMgA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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