Correlation Between Frontier Lithium and Atco Mining
Can any of the company-specific risk be diversified away by investing in both Frontier Lithium and Atco Mining 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 Frontier Lithium and Atco Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Lithium and Atco Mining, you can compare the effects of market volatilities on Frontier Lithium and Atco Mining 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 Frontier Lithium with a short position of Atco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Lithium and Atco Mining.
Diversification Opportunities for Frontier Lithium and Atco Mining
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Frontier and Atco is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Lithium and Atco Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco Mining and Frontier Lithium 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 Frontier Lithium are associated (or correlated) with Atco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco Mining has no effect on the direction of Frontier Lithium i.e., Frontier Lithium and Atco Mining go up and down completely randomly.
Pair Corralation between Frontier Lithium and Atco Mining
Assuming the 90 days horizon Frontier Lithium is expected to generate 11.78 times less return on investment than Atco Mining. But when comparing it to its historical volatility, Frontier Lithium is 7.8 times less risky than Atco Mining. It trades about 0.09 of its potential returns per unit of risk. Atco Mining is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1.18 in Atco Mining on November 22, 2024 and sell it today you would earn a total of 0.40 from holding Atco Mining or generate 33.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Lithium vs. Atco Mining
Performance |
| Timeline |
| Frontier Lithium |
| Atco Mining |
Frontier Lithium and Atco Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Lithium and Atco Mining
The main advantage of trading using opposite Frontier Lithium and Atco Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Lithium position performs unexpectedly, Atco Mining 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 Atco Mining will offset losses from the drop in Atco Mining's long position.| Frontier Lithium vs. Vision Lithium | Frontier Lithium vs. Critical Elements | Frontier Lithium vs. Cypress Development Corp | Frontier Lithium vs. Core Lithium |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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