Correlation Between Liontown Resources and Blue Moon
Can any of the company-specific risk be diversified away by investing in both Liontown Resources and Blue Moon 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 Blue Moon 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 Blue Moon Metals, you can compare the effects of market volatilities on Liontown Resources and Blue Moon 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 Blue Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontown Resources and Blue Moon.
Diversification Opportunities for Liontown Resources and Blue Moon
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liontown and Blue is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources Limited and Blue Moon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Moon Metals 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 Blue Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Moon Metals has no effect on the direction of Liontown Resources i.e., Liontown Resources and Blue Moon go up and down completely randomly.
Pair Corralation between Liontown Resources and Blue Moon
Assuming the 90 days horizon Liontown Resources Limited is expected to under-perform the Blue Moon. In addition to that, Liontown Resources is 1.12 times more volatile than Blue Moon Metals. It trades about -0.14 of its total potential returns per unit of risk. Blue Moon Metals is currently generating about 0.07 per unit of volatility. If you would invest 24.00 in Blue Moon Metals on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Blue Moon Metals or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liontown Resources Limited vs. Blue Moon Metals
Performance |
| Timeline |
| Liontown Resources |
| Blue Moon Metals |
Liontown Resources and Blue Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liontown Resources and Blue Moon
The main advantage of trading using opposite Liontown Resources and Blue Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontown Resources position performs unexpectedly, Blue Moon 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 Blue Moon will offset losses from the drop in Blue Moon's long position.| Liontown Resources vs. Sayona Mining Limited | Liontown Resources vs. Core Lithium | Liontown Resources vs. Critical Elements | Liontown Resources vs. South32 ADR |
| Blue Moon vs. Liontown Resources Limited | Blue Moon vs. ATT Inc | Blue Moon vs. Merck Company | Blue Moon vs. Walt Disney |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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