Correlation Between LithiumBank Resources and ECD Automotive
Can any of the company-specific risk be diversified away by investing in both LithiumBank Resources and ECD Automotive 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 ECD Automotive 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 ECD Automotive Design, you can compare the effects of market volatilities on LithiumBank Resources and ECD Automotive 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 ECD Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of LithiumBank Resources and ECD Automotive.
Diversification Opportunities for LithiumBank Resources and ECD Automotive
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LithiumBank and ECD is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding LithiumBank Resources Corp and ECD Automotive Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECD Automotive Design 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 ECD Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECD Automotive Design has no effect on the direction of LithiumBank Resources i.e., LithiumBank Resources and ECD Automotive go up and down completely randomly.
Pair Corralation between LithiumBank Resources and ECD Automotive
Assuming the 90 days horizon LithiumBank Resources Corp is expected to under-perform the ECD Automotive. But the otc stock apears to be less risky and, when comparing its historical volatility, LithiumBank Resources Corp is 6.29 times less risky than ECD Automotive. The otc stock trades about -0.05 of its potential returns per unit of risk. The ECD Automotive Design is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2.00 in ECD Automotive Design on September 13, 2024 and sell it today you would earn a total of 0.11 from holding ECD Automotive Design or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 38.1% |
| Values | Daily Returns |
LithiumBank Resources Corp vs. ECD Automotive Design
Performance |
| Timeline |
| LithiumBank Resources |
| ECD Automotive Design |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
LithiumBank Resources and ECD Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LithiumBank Resources and ECD Automotive
The main advantage of trading using opposite LithiumBank Resources and ECD Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LithiumBank Resources position performs unexpectedly, ECD Automotive 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 ECD Automotive will offset losses from the drop in ECD Automotive's long position.| LithiumBank Resources vs. Qubec Nickel Corp | LithiumBank Resources vs. IGO Limited | LithiumBank Resources vs. Focus Graphite | LithiumBank Resources vs. Mineral Res |
| ECD Automotive vs. The Coca Cola | ECD Automotive vs. Treasury Wine Estates | ECD Automotive vs. LithiumBank Resources Corp | ECD Automotive vs. Celsius Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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