Correlation Between Noram Lithium and Iconic Minerals
Can any of the company-specific risk be diversified away by investing in both Noram Lithium and Iconic Minerals 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 Noram Lithium and Iconic Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noram Lithium Corp and Iconic Minerals, you can compare the effects of market volatilities on Noram Lithium and Iconic Minerals 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 Noram Lithium with a short position of Iconic Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noram Lithium and Iconic Minerals.
Diversification Opportunities for Noram Lithium and Iconic Minerals
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Noram and Iconic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Noram Lithium Corp and Iconic Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iconic Minerals and Noram Lithium 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 Noram Lithium Corp are associated (or correlated) with Iconic Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iconic Minerals has no effect on the direction of Noram Lithium i.e., Noram Lithium and Iconic Minerals go up and down completely randomly.
Pair Corralation between Noram Lithium and Iconic Minerals
Assuming the 90 days horizon Noram Lithium Corp is expected to under-perform the Iconic Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Noram Lithium Corp is 6.36 times less risky than Iconic Minerals. The stock trades about -0.07 of its potential returns per unit of risk. The Iconic Minerals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Iconic Minerals on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Iconic Minerals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Noram Lithium Corp vs. Iconic Minerals
Performance |
| Timeline |
| Noram Lithium Corp |
| Iconic Minerals |
Noram Lithium and Iconic Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noram Lithium and Iconic Minerals
The main advantage of trading using opposite Noram Lithium and Iconic Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noram Lithium position performs unexpectedly, Iconic Minerals 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 Iconic Minerals will offset losses from the drop in Iconic Minerals' long position.| Noram Lithium vs. First Majestic Silver | Noram Lithium vs. Ivanhoe Energy | Noram Lithium vs. Orezone Gold Corp | Noram Lithium vs. Faraday Copper 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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