Correlation Between Lomiko Metals and Snow Lake
Can any of the company-specific risk be diversified away by investing in both Lomiko Metals and Snow Lake 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 Lomiko Metals and Snow Lake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lomiko Metals and Snow Lake Resources, you can compare the effects of market volatilities on Lomiko Metals and Snow Lake 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 Lomiko Metals with a short position of Snow Lake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lomiko Metals and Snow Lake.
Diversification Opportunities for Lomiko Metals and Snow Lake
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lomiko and Snow is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Lomiko Metals and Snow Lake Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snow Lake Resources and Lomiko Metals 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 Lomiko Metals are associated (or correlated) with Snow Lake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snow Lake Resources has no effect on the direction of Lomiko Metals i.e., Lomiko Metals and Snow Lake go up and down completely randomly.
Pair Corralation between Lomiko Metals and Snow Lake
Assuming the 90 days horizon Lomiko Metals is expected to generate 0.8 times more return on investment than Snow Lake. However, Lomiko Metals is 1.24 times less risky than Snow Lake. It trades about -0.14 of its potential returns per unit of risk. Snow Lake Resources is currently generating about -0.15 per unit of risk. If you would invest 11.00 in Lomiko Metals on August 26, 2024 and sell it today you would lose (2.10) from holding Lomiko Metals or give up 19.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lomiko Metals vs. Snow Lake Resources
Performance |
| Timeline |
| Lomiko Metals |
| Snow Lake Resources |
Lomiko Metals and Snow Lake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lomiko Metals and Snow Lake
The main advantage of trading using opposite Lomiko Metals and Snow Lake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lomiko Metals position performs unexpectedly, Snow Lake 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 Snow Lake will offset losses from the drop in Snow Lake's long position.The idea behind Lomiko Metals and Snow Lake Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Snow Lake vs. Core Lithium | Snow Lake vs. Patriot Battery Metals | Snow Lake vs. Lomiko Metals | Snow Lake vs. Vulcan Energy 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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