Correlation Between LithiumBank Resources and ARCA Japan
Can any of the company-specific risk be diversified away by investing in both LithiumBank Resources and ARCA Japan 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 ARCA Japan 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 ARCA Japan, you can compare the effects of market volatilities on LithiumBank Resources and ARCA Japan 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 ARCA Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of LithiumBank Resources and ARCA Japan.
Diversification Opportunities for LithiumBank Resources and ARCA Japan
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LithiumBank and ARCA is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding LithiumBank Resources Corp and ARCA Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCA Japan 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 ARCA Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCA Japan has no effect on the direction of LithiumBank Resources i.e., LithiumBank Resources and ARCA Japan go up and down completely randomly.
Pair Corralation between LithiumBank Resources and ARCA Japan
Assuming the 90 days horizon LithiumBank Resources Corp is expected to under-perform the ARCA Japan. In addition to that, LithiumBank Resources is 4.71 times more volatile than ARCA Japan. It trades about -0.26 of its total potential returns per unit of risk. ARCA Japan is currently generating about 0.07 per unit of volatility. If you would invest 35,591 in ARCA Japan on September 5, 2024 and sell it today you would earn a total of 263.00 from holding ARCA Japan or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 71.43% |
| Values | Daily Returns |
LithiumBank Resources Corp vs. ARCA Japan
Performance |
| Timeline |
LithiumBank Resources and ARCA Japan Volatility Contrast
Predicted Return Density |
| Returns |
LithiumBank Resources Corp
Pair trading matchups for LithiumBank Resources
ARCA Japan
Pair trading matchups for ARCA Japan
Pair Trading with LithiumBank Resources and ARCA Japan
The main advantage of trading using opposite LithiumBank Resources and ARCA Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LithiumBank Resources position performs unexpectedly, ARCA Japan 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 ARCA Japan will offset losses from the drop in ARCA Japan's long position.| LithiumBank Resources vs. Qubec Nickel Corp | LithiumBank Resources vs. IGO Limited | LithiumBank Resources vs. Focus Graphite | LithiumBank Resources vs. Mineral Res |
| ARCA Japan vs. Allegheny Technologies Incorporated | ARCA Japan vs. Titan International | ARCA Japan vs. Siriuspoint | ARCA Japan 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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