Correlation Between Frontier Lithium and Global Battery
Can any of the company-specific risk be diversified away by investing in both Frontier Lithium and Global Battery 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 Global Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Lithium and Global Battery Metals, you can compare the effects of market volatilities on Frontier Lithium and Global Battery 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 Global Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Lithium and Global Battery.
Diversification Opportunities for Frontier Lithium and Global Battery
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Frontier and Global is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Lithium and Global Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Battery Metals 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 Global Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Battery Metals has no effect on the direction of Frontier Lithium i.e., Frontier Lithium and Global Battery go up and down completely randomly.
Pair Corralation between Frontier Lithium and Global Battery
Assuming the 90 days horizon Frontier Lithium is expected to under-perform the Global Battery. But the otc stock apears to be less risky and, when comparing its historical volatility, Frontier Lithium is 2.18 times less risky than Global Battery. The otc stock trades about -0.17 of its potential returns per unit of risk. The Global Battery Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1.58 in Global Battery Metals on August 29, 2024 and sell it today you would earn a total of 0.22 from holding Global Battery Metals or generate 13.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Lithium vs. Global Battery Metals
Performance |
| Timeline |
| Frontier Lithium |
| Global Battery Metals |
Frontier Lithium and Global Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Lithium and Global Battery
The main advantage of trading using opposite Frontier Lithium and Global Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Lithium position performs unexpectedly, Global Battery 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 Global Battery will offset losses from the drop in Global Battery's long position.| Frontier Lithium vs. Vision Lithium | Frontier Lithium vs. Critical Elements | Frontier Lithium vs. Cypress Development Corp | Frontier Lithium vs. Core Lithium |
| Global Battery vs. Silver Hammer Mining | Global Battery vs. Reyna Silver Corp | Global Battery vs. Guanajuato Silver | Global Battery vs. Silver One Resources |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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