Correlation Between Lithium Australia and Vanadium One
Can any of the company-specific risk be diversified away by investing in both Lithium Australia and Vanadium One 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 Vanadium One 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 Vanadium One Iron, you can compare the effects of market volatilities on Lithium Australia and Vanadium One 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 Vanadium One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Australia and Vanadium One.
Diversification Opportunities for Lithium Australia and Vanadium One
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lithium and Vanadium is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Australia NL and Vanadium One Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanadium One Iron 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 Vanadium One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanadium One Iron has no effect on the direction of Lithium Australia i.e., Lithium Australia and Vanadium One go up and down completely randomly.
Pair Corralation between Lithium Australia and Vanadium One
If you would invest 0.78 in Lithium Australia NL on September 3, 2024 and sell it today you would lose (0.08) from holding Lithium Australia NL or give up 10.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
Lithium Australia NL vs. Vanadium One Iron
Performance |
| Timeline |
| Lithium Australia |
| Vanadium One Iron |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lithium Australia and Vanadium One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Australia and Vanadium One
The main advantage of trading using opposite Lithium Australia and Vanadium One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Australia position performs unexpectedly, Vanadium One 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 Vanadium One will offset losses from the drop in Vanadium One'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 |
| Vanadium One vs. First American Silver | Vanadium One vs. Australian Vanadium Limited | Vanadium One vs. International Lithium Corp | Vanadium One vs. Wealth Minerals |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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