Correlation Between NioCorp Developments and LithiumBank Resources
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and LithiumBank 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 NioCorp Developments and LithiumBank Resources 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 LithiumBank Resources Corp, you can compare the effects of market volatilities on NioCorp Developments and LithiumBank 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 NioCorp Developments with a short position of LithiumBank Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and LithiumBank Resources.
Diversification Opportunities for NioCorp Developments and LithiumBank Resources
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NioCorp and LithiumBank is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank Resources 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 LithiumBank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LithiumBank Resources has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and LithiumBank Resources go up and down completely randomly.
Pair Corralation between NioCorp Developments and LithiumBank Resources
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to generate 8.2 times more return on investment than LithiumBank Resources. However, NioCorp Developments is 8.2 times more volatile than LithiumBank Resources Corp. It trades about 0.04 of its potential returns per unit of risk. LithiumBank Resources Corp is currently generating about -0.03 per unit of risk. If you would invest 80.00 in NioCorp Developments Ltd on September 2, 2024 and sell it today you would earn a total of 53.00 from holding NioCorp Developments Ltd or generate 66.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. LithiumBank Resources Corp
Performance |
| Timeline |
| NioCorp Developments |
| LithiumBank Resources |
NioCorp Developments and LithiumBank Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and LithiumBank Resources
The main advantage of trading using opposite NioCorp Developments and LithiumBank Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments position performs unexpectedly, LithiumBank 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 LithiumBank Resources will offset losses from the drop in LithiumBank Resources' long position.| NioCorp Developments vs. Teck Resources Ltd | NioCorp Developments vs. Sigma Lithium Resources | NioCorp Developments vs. Vale SA ADR | NioCorp Developments vs. Sayona Mining Limited |
| LithiumBank Resources vs. Qubec Nickel Corp | LithiumBank Resources vs. IGO Limited | LithiumBank Resources vs. Focus Graphite | LithiumBank Resources vs. Mineral Res |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |