Correlation Between Nova Lithium and Patriot Battery
Can any of the company-specific risk be diversified away by investing in both Nova Lithium and Patriot Battery 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 Patriot Battery 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 Patriot Battery Metals, you can compare the effects of market volatilities on Nova Lithium and Patriot Battery 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 Patriot Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Lithium and Patriot Battery.
Diversification Opportunities for Nova Lithium and Patriot Battery
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nova and Patriot is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nova Lithium Corp and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery Metals 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 Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of Nova Lithium i.e., Nova Lithium and Patriot Battery go up and down completely randomly.
Pair Corralation between Nova Lithium and Patriot Battery
Assuming the 90 days horizon Nova Lithium Corp is expected to generate 6.39 times more return on investment than Patriot Battery. However, Nova Lithium is 6.39 times more volatile than Patriot Battery Metals. It trades about 0.08 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about -0.06 per unit of risk. If you would invest 27.00 in Nova Lithium Corp on September 1, 2024 and sell it today you would lose (2.00) from holding Nova Lithium Corp or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Nova Lithium Corp vs. Patriot Battery Metals
Performance |
| Timeline |
| Nova Lithium Corp |
| Patriot Battery Metals |
Nova Lithium and Patriot Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Lithium and Patriot Battery
The main advantage of trading using opposite Nova Lithium and Patriot Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Lithium position performs unexpectedly, Patriot Battery 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 Patriot Battery will offset losses from the drop in Patriot Battery's long position.| Nova Lithium vs. Legacy Education | Nova Lithium vs. Apple Inc | Nova Lithium vs. NVIDIA | Nova Lithium vs. Microsoft |
| Patriot Battery vs. ATT Inc | Patriot Battery vs. Merck Company | Patriot Battery vs. Walt Disney | Patriot Battery vs. Caterpillar |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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