Correlation Between Jervois Mining and Frontier Lithium
Can any of the company-specific risk be diversified away by investing in both Jervois Mining and Frontier 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 Jervois Mining and Frontier Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jervois Mining and Frontier Lithium, you can compare the effects of market volatilities on Jervois Mining and Frontier 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 Jervois Mining with a short position of Frontier Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jervois Mining and Frontier Lithium.
Diversification Opportunities for Jervois Mining and Frontier Lithium
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Jervois and Frontier is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Jervois Mining and Frontier Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Lithium and Jervois 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 Jervois Mining are associated (or correlated) with Frontier Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Lithium has no effect on the direction of Jervois Mining i.e., Jervois Mining and Frontier Lithium go up and down completely randomly.
Pair Corralation between Jervois Mining and Frontier Lithium
Assuming the 90 days horizon Jervois Mining is expected to under-perform the Frontier Lithium. In addition to that, Jervois Mining is 3.87 times more volatile than Frontier Lithium. It trades about -0.05 of its total potential returns per unit of risk. Frontier Lithium is currently generating about -0.11 per unit of volatility. If you would invest 60.00 in Frontier Lithium on August 28, 2024 and sell it today you would lose (6.00) from holding Frontier Lithium or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jervois Mining vs. Frontier Lithium
Performance |
| Timeline |
| Jervois Mining |
| Frontier Lithium |
Jervois Mining and Frontier Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jervois Mining and Frontier Lithium
The main advantage of trading using opposite Jervois Mining and Frontier Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jervois Mining position performs unexpectedly, Frontier 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 Frontier Lithium will offset losses from the drop in Frontier Lithium's long position.| Jervois Mining vs. First Majestic Silver | Jervois Mining vs. Ivanhoe Energy | Jervois Mining vs. Orezone Gold Corp | Jervois Mining vs. Faraday Copper Corp |
| Frontier Lithium vs. Critical Elements | Frontier Lithium vs. Rock Tech Lithium | Frontier Lithium vs. American Lithium Corp | Frontier Lithium vs. American Manganese |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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