Correlation Between NioCorp Developments and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and Lithium Americas 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 NioCorp Developments and Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NioCorp Developments Ltd and Lithium Americas Corp, you can compare the effects of market volatilities on NioCorp Developments and Lithium Americas 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 NioCorp Developments with a short position of Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Lithium Americas.
Diversification Opportunities for NioCorp Developments and Lithium Americas
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NioCorp and Lithium is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Lithium Americas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Americas Corp and NioCorp Developments 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 NioCorp Developments Ltd are associated (or correlated) with Lithium Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Americas Corp has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Lithium Americas go up and down completely randomly.
Pair Corralation between NioCorp Developments and Lithium Americas
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Lithium Americas. But the stock apears to be less risky and, when comparing its historical volatility, NioCorp Developments Ltd is 1.18 times less risky than Lithium Americas. The stock trades about -0.42 of its potential returns per unit of risk. The Lithium Americas Corp is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 451.00 in Lithium Americas Corp on August 30, 2024 and sell it today you would lose (56.00) from holding Lithium Americas Corp or give up 12.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. Lithium Americas Corp
Performance |
| Timeline |
| NioCorp Developments |
| Lithium Americas Corp |
NioCorp Developments and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and Lithium Americas
The main advantage of trading using opposite NioCorp Developments and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments position performs unexpectedly, Lithium Americas 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 Lithium Americas will offset losses from the drop in Lithium Americas' long position.| NioCorp Developments vs. Vale SA ADR | NioCorp Developments vs. Teck Resources Ltd | NioCorp Developments vs. MP Materials Corp | NioCorp Developments vs. Lithium Americas Corp |
| Lithium Americas vs. Sigma Lithium Resources | Lithium Americas vs. Standard Lithium | Lithium Americas vs. Sayona Mining Limited | Lithium Americas vs. MP Materials 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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