Correlation Between Nexa Resources and Standard Lithium
Can any of the company-specific risk be diversified away by investing in both Nexa Resources 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 Nexa Resources and Standard Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nexa Resources SA and Standard Lithium, you can compare the effects of market volatilities on Nexa Resources 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 Nexa Resources with a short position of Standard Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexa Resources and Standard Lithium.
Diversification Opportunities for Nexa Resources and Standard Lithium
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nexa and Standard is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources SA and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium and Nexa Resources 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 Nexa Resources SA 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 Nexa Resources i.e., Nexa Resources and Standard Lithium go up and down completely randomly.
Pair Corralation between Nexa Resources and Standard Lithium
Given the investment horizon of 90 days Nexa Resources SA is expected to generate 0.34 times more return on investment than Standard Lithium. However, Nexa Resources SA is 2.93 times less risky than Standard Lithium. It trades about -0.06 of its potential returns per unit of risk. Standard Lithium is currently generating about -0.26 per unit of risk. If you would invest 786.00 in Nexa Resources SA on August 29, 2024 and sell it today you would lose (21.00) from holding Nexa Resources SA or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexa Resources SA vs. Standard Lithium
Performance |
| Timeline |
| Nexa Resources SA |
| Standard Lithium |
Nexa Resources and Standard Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexa Resources and Standard Lithium
The main advantage of trading using opposite Nexa Resources and Standard Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexa Resources 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.| Nexa Resources vs. Materion | Nexa Resources vs. Fury Gold Mines | Nexa Resources vs. Eskay Mining Corp | Nexa Resources 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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