Correlation Between Lithium Chile and Ultra Resources
Can any of the company-specific risk be diversified away by investing in both Lithium Chile and Ultra Resources 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 Chile and Ultra Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Chile and Ultra Resources, you can compare the effects of market volatilities on Lithium Chile and Ultra Resources 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 Chile with a short position of Ultra Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Chile and Ultra Resources.
Diversification Opportunities for Lithium Chile and Ultra Resources
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lithium and Ultra is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Chile and Ultra Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Resources and Lithium Chile 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 Chile are associated (or correlated) with Ultra Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Resources has no effect on the direction of Lithium Chile i.e., Lithium Chile and Ultra Resources go up and down completely randomly.
Pair Corralation between Lithium Chile and Ultra Resources
If you would invest 2.00 in Ultra Resources on September 1, 2024 and sell it today you would lose (1.00) from holding Ultra Resources or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Chile vs. Ultra Resources
Performance |
| Timeline |
| Lithium Chile |
| Ultra Resources |
Lithium Chile and Ultra Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Chile and Ultra Resources
The main advantage of trading using opposite Lithium Chile and Ultra Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Chile position performs unexpectedly, Ultra Resources 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 Ultra Resources will offset losses from the drop in Ultra Resources' long position.| Lithium Chile vs. GoMgA Resources | Lithium Chile vs. Infinite Ore Corp | Lithium Chile vs. FPX Nickel Corp | Lithium Chile vs. Power Metals Corp |
| Ultra Resources vs. International Lithium Corp | Ultra Resources vs. Lithium Chile | Ultra Resources vs. Lynas Rare Earths | Ultra Resources vs. Lithium Americas Corp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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