Correlation Between Nova Lithium and Argosy Minerals
Can any of the company-specific risk be diversified away by investing in both Nova Lithium and Argosy 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 Nova Lithium and Argosy Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Lithium Corp and Argosy Minerals Limited, you can compare the effects of market volatilities on Nova Lithium and Argosy 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 Nova Lithium with a short position of Argosy Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Lithium and Argosy Minerals.
Diversification Opportunities for Nova Lithium and Argosy Minerals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nova and Argosy is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nova Lithium Corp and Argosy Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argosy Minerals and Nova 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 Nova Lithium Corp are associated (or correlated) with Argosy Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argosy Minerals has no effect on the direction of Nova Lithium i.e., Nova Lithium and Argosy Minerals go up and down completely randomly.
Pair Corralation between Nova Lithium and Argosy Minerals
Assuming the 90 days horizon Nova Lithium Corp is expected to generate 0.53 times more return on investment than Argosy Minerals. However, Nova Lithium Corp is 1.87 times less risky than Argosy Minerals. It trades about -0.03 of its potential returns per unit of risk. Argosy Minerals Limited is currently generating about -0.06 per unit of risk. If you would invest 27.00 in Nova Lithium Corp on September 5, 2024 and sell it today you would lose (3.00) from holding Nova Lithium Corp or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Lithium Corp vs. Argosy Minerals Limited
Performance |
| Timeline |
| Nova Lithium Corp |
| Argosy Minerals |
Nova Lithium and Argosy Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Lithium and Argosy Minerals
The main advantage of trading using opposite Nova Lithium and Argosy Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Lithium position performs unexpectedly, Argosy 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 Argosy Minerals will offset losses from the drop in Argosy Minerals' long position.| Nova Lithium vs. Biglari Holdings | Nova Lithium vs. Yum Brands | Nova Lithium vs. Sweetgreen | Nova Lithium vs. Playa Hotels Resorts |
| Argosy Minerals vs. Qubec Nickel Corp | Argosy Minerals vs. IGO Limited | Argosy Minerals vs. Avarone Metals | Argosy Minerals vs. Elcora Advanced Materials |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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