Correlation Between Liontown Resources and American Manganese
Can any of the company-specific risk be diversified away by investing in both Liontown Resources and American Manganese 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 Liontown Resources and American Manganese into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liontown Resources Limited and American Manganese, you can compare the effects of market volatilities on Liontown Resources and American Manganese 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 Liontown Resources with a short position of American Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontown Resources and American Manganese.
Diversification Opportunities for Liontown Resources and American Manganese
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Liontown and American is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources Limited and American Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Manganese and Liontown 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 Liontown Resources Limited are associated (or correlated) with American Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Manganese has no effect on the direction of Liontown Resources i.e., Liontown Resources and American Manganese go up and down completely randomly.
Pair Corralation between Liontown Resources and American Manganese
Assuming the 90 days horizon Liontown Resources Limited is expected to generate 0.72 times more return on investment than American Manganese. However, Liontown Resources Limited is 1.4 times less risky than American Manganese. It trades about 0.07 of its potential returns per unit of risk. American Manganese is currently generating about 0.04 per unit of risk. If you would invest 44.00 in Liontown Resources Limited on September 2, 2024 and sell it today you would earn a total of 7.00 from holding Liontown Resources Limited or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liontown Resources Limited vs. American Manganese
Performance |
| Timeline |
| Liontown Resources |
| American Manganese |
Liontown Resources and American Manganese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liontown Resources and American Manganese
The main advantage of trading using opposite Liontown Resources and American Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontown Resources position performs unexpectedly, American Manganese 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 American Manganese will offset losses from the drop in American Manganese's long position.| Liontown Resources vs. Sayona Mining Limited | Liontown Resources vs. Core Lithium | Liontown Resources vs. Critical Elements | Liontown Resources vs. South32 ADR |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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