Correlation Between E3 LITHIUM and Apple
Can any of the company-specific risk be diversified away by investing in both E3 LITHIUM and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on E3 LITHIUM and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of E3 LITHIUM and Apple.
Diversification Opportunities for E3 LITHIUM and Apple
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between OW3 and Apple is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding E3 LITHIUM LTD and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of E3 LITHIUM i.e., E3 LITHIUM and Apple go up and down completely randomly.
Pair Corralation between E3 LITHIUM and Apple
Assuming the 90 days horizon E3 LITHIUM LTD is expected to generate 2.38 times more return on investment than Apple. However, E3 LITHIUM is 2.38 times more volatile than Apple Inc. It trades about 0.16 of its potential returns per unit of risk. Apple Inc is currently generating about -0.45 per unit of risk. If you would invest 58.00 in E3 LITHIUM LTD on October 25, 2024 and sell it today you would earn a total of 6.00 from holding E3 LITHIUM LTD or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E3 LITHIUM LTD vs. Apple Inc
Performance |
| Timeline |
| E3 LITHIUM LTD |
| Apple Inc |
E3 LITHIUM and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E3 LITHIUM and Apple
The main advantage of trading using opposite E3 LITHIUM and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E3 LITHIUM position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.The idea behind E3 LITHIUM LTD and Apple Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Apple vs. PEPTONIC MEDICAL | Apple vs. SMA Solar Technology | Apple vs. AECOM TECHNOLOGY | Apple vs. Medical Properties Trust |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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