Correlation Between LithiumBank Resources and E3 Lithium
Can any of the company-specific risk be diversified away by investing in both LithiumBank Resources and E3 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 LithiumBank Resources and E3 Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LithiumBank Resources Corp and E3 Lithium, you can compare the effects of market volatilities on LithiumBank Resources and E3 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 LithiumBank Resources with a short position of E3 Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of LithiumBank Resources and E3 Lithium.
Diversification Opportunities for LithiumBank Resources and E3 Lithium
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LithiumBank and ETL is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding LithiumBank Resources Corp and E3 Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E3 Lithium and LithiumBank Resources 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 LithiumBank Resources Corp are associated (or correlated) with E3 Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E3 Lithium has no effect on the direction of LithiumBank Resources i.e., LithiumBank Resources and E3 Lithium go up and down completely randomly.
Pair Corralation between LithiumBank Resources and E3 Lithium
Assuming the 90 days trading horizon LithiumBank Resources Corp is expected to under-perform the E3 Lithium. In addition to that, LithiumBank Resources is 1.86 times more volatile than E3 Lithium. It trades about -0.17 of its total potential returns per unit of risk. E3 Lithium is currently generating about -0.11 per unit of volatility. If you would invest 119.00 in E3 Lithium on August 28, 2024 and sell it today you would lose (9.00) from holding E3 Lithium or give up 7.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
LithiumBank Resources Corp vs. E3 Lithium
Performance |
| Timeline |
| LithiumBank Resources |
| E3 Lithium |
LithiumBank Resources and E3 Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LithiumBank Resources and E3 Lithium
The main advantage of trading using opposite LithiumBank Resources and E3 Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LithiumBank Resources position performs unexpectedly, E3 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 E3 Lithium will offset losses from the drop in E3 Lithium's long position.| LithiumBank Resources vs. First Majestic Silver | LithiumBank Resources vs. Ivanhoe Energy | LithiumBank Resources vs. Orezone Gold Corp | LithiumBank Resources vs. Faraday Copper Corp |
| E3 Lithium vs. Frontier Lithium | E3 Lithium vs. Sigma Lithium Resources | E3 Lithium vs. Standard Lithium | E3 Lithium vs. LithiumBank Resources Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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