Correlation Between Liontown Resources and C3 Metals
Can any of the company-specific risk be diversified away by investing in both Liontown Resources and C3 Metals 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 C3 Metals 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 C3 Metals, you can compare the effects of market volatilities on Liontown Resources and C3 Metals 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 C3 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontown Resources and C3 Metals.
Diversification Opportunities for Liontown Resources and C3 Metals
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liontown and CUAUF is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources Limited and C3 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C3 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 C3 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C3 Metals has no effect on the direction of Liontown Resources i.e., Liontown Resources and C3 Metals go up and down completely randomly.
Pair Corralation between Liontown Resources and C3 Metals
Assuming the 90 days horizon Liontown Resources Limited is expected to generate 0.74 times more return on investment than C3 Metals. However, Liontown Resources Limited is 1.36 times less risky than C3 Metals. It trades about -0.08 of its potential returns per unit of risk. C3 Metals is currently generating about -0.46 per unit of risk. If you would invest 55.00 in Liontown Resources Limited on September 2, 2024 and sell it today you would lose (4.00) from holding Liontown Resources Limited or give up 7.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 38.1% |
| Values | Daily Returns |
Liontown Resources Limited vs. C3 Metals
Performance |
| Timeline |
| Liontown Resources |
| C3 Metals |
Liontown Resources and C3 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liontown Resources and C3 Metals
The main advantage of trading using opposite Liontown Resources and C3 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontown Resources position performs unexpectedly, C3 Metals 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 C3 Metals will offset losses from the drop in C3 Metals' long position.| Liontown Resources vs. Sayona Mining Limited | Liontown Resources vs. Core Lithium | Liontown Resources vs. Critical Elements | Liontown Resources vs. South32 ADR |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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