Correlation Between Materion and Standard Lithium
Can any of the company-specific risk be diversified away by investing in both Materion and Standard Lithium 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 Materion and Standard Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materion and Standard Lithium, you can compare the effects of market volatilities on Materion and Standard Lithium 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 Materion with a short position of Standard Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materion and Standard Lithium.
Diversification Opportunities for Materion and Standard Lithium
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Materion and Standard is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Materion and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium and Materion 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 Materion are associated (or correlated) with Standard Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Lithium has no effect on the direction of Materion i.e., Materion and Standard Lithium go up and down completely randomly.
Pair Corralation between Materion and Standard Lithium
Given the investment horizon of 90 days Materion is expected to generate 0.56 times more return on investment than Standard Lithium. However, Materion is 1.77 times less risky than Standard Lithium. It trades about 0.17 of its potential returns per unit of risk. Standard Lithium is currently generating about -0.26 per unit of risk. If you would invest 10,446 in Materion on August 29, 2024 and sell it today you would earn a total of 1,088 from holding Materion or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materion vs. Standard Lithium
Performance |
| Timeline |
| Materion |
| Standard Lithium |
Materion and Standard Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materion and Standard Lithium
The main advantage of trading using opposite Materion and Standard Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materion position performs unexpectedly, Standard Lithium 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 Standard Lithium will offset losses from the drop in Standard Lithium's long position.| Materion vs. Skeena Resources | Materion vs. Compass Minerals International | Materion vs. IperionX Limited American | Materion vs. EMX Royalty Corp |
| Standard Lithium vs. Lithium Americas Corp | Standard Lithium vs. Piedmont Lithium Ltd | Standard Lithium vs. NioCorp Developments Ltd | Standard Lithium vs. Teck Resources Ltd |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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