Correlation Between Lithium Australia and CanAlaska Uranium
Can any of the company-specific risk be diversified away by investing in both Lithium Australia and CanAlaska Uranium 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 Lithium Australia and CanAlaska Uranium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Australia NL and CanAlaska Uranium, you can compare the effects of market volatilities on Lithium Australia and CanAlaska Uranium 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 Lithium Australia with a short position of CanAlaska Uranium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Australia and CanAlaska Uranium.
Diversification Opportunities for Lithium Australia and CanAlaska Uranium
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lithium and CanAlaska is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Australia NL and CanAlaska Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanAlaska Uranium and Lithium Australia 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 Lithium Australia NL are associated (or correlated) with CanAlaska Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanAlaska Uranium has no effect on the direction of Lithium Australia i.e., Lithium Australia and CanAlaska Uranium go up and down completely randomly.
Pair Corralation between Lithium Australia and CanAlaska Uranium
Assuming the 90 days horizon Lithium Australia NL is expected to generate 5.46 times more return on investment than CanAlaska Uranium. However, Lithium Australia is 5.46 times more volatile than CanAlaska Uranium. It trades about 0.01 of its potential returns per unit of risk. CanAlaska Uranium is currently generating about 0.01 per unit of risk. If you would invest 1.40 in Lithium Australia NL on August 29, 2024 and sell it today you would lose (0.25) from holding Lithium Australia NL or give up 17.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lithium Australia NL vs. CanAlaska Uranium
Performance |
| Timeline |
| Lithium Australia |
| CanAlaska Uranium |
Lithium Australia and CanAlaska Uranium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Australia and CanAlaska Uranium
The main advantage of trading using opposite Lithium Australia and CanAlaska Uranium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Australia position performs unexpectedly, CanAlaska Uranium 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 CanAlaska Uranium will offset losses from the drop in CanAlaska Uranium's long position.| Lithium Australia vs. Grid Metals Corp | Lithium Australia vs. Latin Metals | Lithium Australia vs. First American Silver | Lithium Australia vs. IGO Limited |
| CanAlaska Uranium vs. Forum Energy Metals | CanAlaska Uranium vs. Namibia Critical Metals | CanAlaska Uranium vs. Themac Resources Group | CanAlaska Uranium vs. Pasinex Resources Limited |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Stocks Directory Find actively traded stocks across global markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |