Correlation Between Liontown Resources and Flying Nickel
Can any of the company-specific risk be diversified away by investing in both Liontown Resources and Flying Nickel 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 Flying Nickel 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 Flying Nickel Mining, you can compare the effects of market volatilities on Liontown Resources and Flying Nickel 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 Flying Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontown Resources and Flying Nickel.
Diversification Opportunities for Liontown Resources and Flying Nickel
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liontown and Flying is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources Limited and Flying Nickel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flying Nickel Mining 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 Flying Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flying Nickel Mining has no effect on the direction of Liontown Resources i.e., Liontown Resources and Flying Nickel go up and down completely randomly.
Pair Corralation between Liontown Resources and Flying Nickel
Assuming the 90 days horizon Liontown Resources Limited is expected to under-perform the Flying Nickel. But the pink sheet apears to be less risky and, when comparing its historical volatility, Liontown Resources Limited is 6.02 times less risky than Flying Nickel. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Flying Nickel Mining is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Flying Nickel Mining on August 31, 2024 and sell it today you would earn a total of 1.99 from holding Flying Nickel Mining or generate 66.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liontown Resources Limited vs. Flying Nickel Mining
Performance |
| Timeline |
| Liontown Resources |
| Flying Nickel Mining |
Liontown Resources and Flying Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liontown Resources and Flying Nickel
The main advantage of trading using opposite Liontown Resources and Flying Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontown Resources position performs unexpectedly, Flying Nickel 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 Flying Nickel will offset losses from the drop in Flying Nickel's long position.| Liontown Resources vs. Sayona Mining Limited | Liontown Resources vs. Core Lithium | Liontown Resources vs. Critical Elements | Liontown Resources vs. South32 ADR |
| Flying Nickel vs. Liontown Resources Limited | Flying Nickel vs. ATT Inc | Flying Nickel vs. Merck Company | Flying Nickel 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 CEOs Directory module to screen CEOs from public companies around the world.
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