Correlation Between NYSE Composite and Foremost Lithium
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Foremost 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 NYSE Composite and Foremost Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Foremost Lithium Resource, you can compare the effects of market volatilities on NYSE Composite and Foremost 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 NYSE Composite with a short position of Foremost Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Foremost Lithium.
Diversification Opportunities for NYSE Composite and Foremost Lithium
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Foremost is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Foremost Lithium Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foremost Lithium Resource and NYSE Composite 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 NYSE Composite are associated (or correlated) with Foremost Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foremost Lithium Resource has no effect on the direction of NYSE Composite i.e., NYSE Composite and Foremost Lithium go up and down completely randomly.
Pair Corralation between NYSE Composite and Foremost Lithium
Assuming the 90 days trading horizon NYSE Composite is expected to generate 26.37 times less return on investment than Foremost Lithium. But when comparing it to its historical volatility, NYSE Composite is 32.5 times less risky than Foremost Lithium. It trades about 0.11 of its potential returns per unit of risk. Foremost Lithium Resource is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 62.00 in Foremost Lithium Resource on August 29, 2024 and sell it today you would lose (30.00) from holding Foremost Lithium Resource or give up 48.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 50.13% |
| Values | Daily Returns |
NYSE Composite vs. Foremost Lithium Resource
Performance |
| Timeline |
NYSE Composite and Foremost Lithium Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Foremost Lithium Resource
Pair trading matchups for Foremost Lithium
Pair Trading with NYSE Composite and Foremost Lithium
The main advantage of trading using opposite NYSE Composite and Foremost Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Foremost 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 Foremost Lithium will offset losses from the drop in Foremost Lithium's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Foremost Lithium vs. Presidio Property Trust | Foremost Lithium vs. Femasys | Foremost Lithium vs. Western Asset Investment | Foremost Lithium vs. MGIC Investment 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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