Correlation Between Frontier Lithium and E3 Metals
Can any of the company-specific risk be diversified away by investing in both Frontier Lithium and E3 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 Frontier Lithium and E3 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Lithium and E3 Metals Corp, you can compare the effects of market volatilities on Frontier Lithium and E3 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 Frontier Lithium with a short position of E3 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Lithium and E3 Metals.
Diversification Opportunities for Frontier Lithium and E3 Metals
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Frontier and EEMMF is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Lithium and E3 Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E3 Metals Corp 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 E3 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E3 Metals Corp has no effect on the direction of Frontier Lithium i.e., Frontier Lithium and E3 Metals go up and down completely randomly.
Pair Corralation between Frontier Lithium and E3 Metals
Assuming the 90 days horizon Frontier Lithium is expected to under-perform the E3 Metals. In addition to that, Frontier Lithium is 1.49 times more volatile than E3 Metals Corp. It trades about -0.06 of its total potential returns per unit of risk. E3 Metals Corp is currently generating about -0.02 per unit of volatility. If you would invest 71.00 in E3 Metals Corp on September 14, 2024 and sell it today you would lose (2.00) from holding E3 Metals Corp or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Lithium vs. E3 Metals Corp
Performance |
| Timeline |
| Frontier Lithium |
| E3 Metals Corp |
Frontier Lithium and E3 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Lithium and E3 Metals
The main advantage of trading using opposite Frontier Lithium and E3 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Lithium position performs unexpectedly, E3 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 E3 Metals will offset losses from the drop in E3 Metals' long position.| Frontier Lithium vs. Vision Lithium | Frontier Lithium vs. Critical Elements | Frontier Lithium vs. Cypress Development Corp | Frontier Lithium vs. Core Lithium |
| E3 Metals vs. Altura Mining Limited | E3 Metals vs. Frontier Lithium | E3 Metals vs. Savannah Resources Plc | E3 Metals vs. Lithium Ionic Corp |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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