Correlation Between Noram Lithium and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Noram Lithium and Sandfire 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 Noram Lithium and Sandfire Resources 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 Sandfire Resources America, you can compare the effects of market volatilities on Noram Lithium and Sandfire 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 Noram Lithium with a short position of Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noram Lithium and Sandfire Resources.
Diversification Opportunities for Noram Lithium and Sandfire Resources
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Noram and Sandfire is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Noram Lithium Corp and Sandfire Resources America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Noram Lithium i.e., Noram Lithium and Sandfire Resources go up and down completely randomly.
Pair Corralation between Noram Lithium and Sandfire Resources
Assuming the 90 days horizon Noram Lithium Corp is expected to generate 1.07 times more return on investment than Sandfire Resources. However, Noram Lithium is 1.07 times more volatile than Sandfire Resources America. It trades about 0.04 of its potential returns per unit of risk. Sandfire Resources America is currently generating about 0.01 per unit of risk. If you would invest 12.00 in Noram Lithium Corp on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Noram Lithium Corp or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Noram Lithium Corp vs. Sandfire Resources America
Performance |
| Timeline |
| Noram Lithium Corp |
| Sandfire Resources |
Noram Lithium and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noram Lithium and Sandfire Resources
The main advantage of trading using opposite Noram Lithium and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noram Lithium position performs unexpectedly, Sandfire 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| Noram Lithium vs. Algoma Steel Group | Noram Lithium vs. Champion Iron | Noram Lithium vs. International Zeolite Corp | Noram Lithium vs. European Residential Real |
| Sandfire Resources vs. Algoma Steel Group | Sandfire Resources vs. Champion Iron | Sandfire Resources vs. International Zeolite Corp | Sandfire Resources vs. European Residential Real |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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