Correlation Between Lithium Power and Bravada Gold
Can any of the company-specific risk be diversified away by investing in both Lithium Power and Bravada Gold 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 Power and Bravada Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Power International and Bravada Gold, you can compare the effects of market volatilities on Lithium Power and Bravada Gold 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 Power with a short position of Bravada Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Power and Bravada Gold.
Diversification Opportunities for Lithium Power and Bravada Gold
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lithium and Bravada is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Power International and Bravada Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravada Gold and Lithium Power 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 Power International are associated (or correlated) with Bravada Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravada Gold has no effect on the direction of Lithium Power i.e., Lithium Power and Bravada Gold go up and down completely randomly.
Pair Corralation between Lithium Power and Bravada Gold
Assuming the 90 days horizon Lithium Power International is expected to under-perform the Bravada Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lithium Power International is 1.75 times less risky than Bravada Gold. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Bravada Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Bravada Gold on August 31, 2024 and sell it today you would lose (1.60) from holding Bravada Gold or give up 53.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 28.51% |
| Values | Daily Returns |
Lithium Power International vs. Bravada Gold
Performance |
| Timeline |
| Lithium Power Intern |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bravada Gold |
Lithium Power and Bravada Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Power and Bravada Gold
The main advantage of trading using opposite Lithium Power and Bravada Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Power position performs unexpectedly, Bravada Gold 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 Bravada Gold will offset losses from the drop in Bravada Gold's long position.| Lithium Power vs. Macmahon Holdings Limited | Lithium Power vs. Rokmaster Resources Corp | Lithium Power vs. Hudson Resources | Lithium Power vs. Thunder Gold Corp |
| Bravada Gold vs. Golden Goliath Resources | Bravada Gold vs. Canada Rare Earth | Bravada Gold vs. First American Silver | Bravada Gold vs. Horizonte Minerals Plc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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