Correlation Between E3 LITHIUM and Superior Plus
Can any of the company-specific risk be diversified away by investing in both E3 LITHIUM and Superior Plus 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 E3 LITHIUM and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E3 LITHIUM LTD and Superior Plus Corp, you can compare the effects of market volatilities on E3 LITHIUM and Superior Plus 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 E3 LITHIUM with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of E3 LITHIUM and Superior Plus.
Diversification Opportunities for E3 LITHIUM and Superior Plus
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between OW3 and Superior is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding E3 LITHIUM LTD and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and E3 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 E3 LITHIUM LTD are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of E3 LITHIUM i.e., E3 LITHIUM and Superior Plus go up and down completely randomly.
Pair Corralation between E3 LITHIUM and Superior Plus
Assuming the 90 days horizon E3 LITHIUM LTD is expected to generate 1.73 times more return on investment than Superior Plus. However, E3 LITHIUM is 1.73 times more volatile than Superior Plus Corp. It trades about 0.2 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.1 per unit of risk. If you would invest 63.00 in E3 LITHIUM LTD on October 10, 2024 and sell it today you would earn a total of 9.00 from holding E3 LITHIUM LTD or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E3 LITHIUM LTD vs. Superior Plus Corp
Performance |
| Timeline |
| E3 LITHIUM LTD |
| Superior Plus Corp |
E3 LITHIUM and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E3 LITHIUM and Superior Plus
The main advantage of trading using opposite E3 LITHIUM and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E3 LITHIUM position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| E3 LITHIUM vs. WESANA HEALTH HOLD | E3 LITHIUM vs. Zurich Insurance Group | E3 LITHIUM vs. MPH Health Care | E3 LITHIUM vs. Insurance Australia Group |
| Superior Plus vs. Hyatt Hotels | Superior Plus vs. SENECA FOODS A | Superior Plus vs. Tyson Foods | Superior Plus vs. Choice Hotels International |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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