Correlation Between Patriot Lithium and Sky Metals
Can any of the company-specific risk be diversified away by investing in both Patriot Lithium and Sky Metals 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 Patriot Lithium and Sky Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patriot Lithium and Sky Metals, you can compare the effects of market volatilities on Patriot Lithium and Sky Metals 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 Patriot Lithium with a short position of Sky Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patriot Lithium and Sky Metals.
Diversification Opportunities for Patriot Lithium and Sky Metals
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Patriot and Sky is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Patriot Lithium and Sky Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky Metals and Patriot 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 Patriot Lithium are associated (or correlated) with Sky Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky Metals has no effect on the direction of Patriot Lithium i.e., Patriot Lithium and Sky Metals go up and down completely randomly.
Pair Corralation between Patriot Lithium and Sky Metals
Assuming the 90 days trading horizon Patriot Lithium is expected to under-perform the Sky Metals. But the stock apears to be less risky and, when comparing its historical volatility, Patriot Lithium is 1.03 times less risky than Sky Metals. The stock trades about -0.04 of its potential returns per unit of risk. The Sky Metals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 5.30 in Sky Metals on September 4, 2024 and sell it today you would lose (0.20) from holding Sky Metals or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patriot Lithium vs. Sky Metals
Performance |
| Timeline |
| Patriot Lithium |
| Sky Metals |
Patriot Lithium and Sky Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patriot Lithium and Sky Metals
The main advantage of trading using opposite Patriot Lithium and Sky Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patriot Lithium position performs unexpectedly, Sky Metals 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 Sky Metals will offset losses from the drop in Sky Metals' long position.| Patriot Lithium vs. Bio Gene Technology | Patriot Lithium vs. Macquarie Technology Group | Patriot Lithium vs. Ainsworth Game Technology | Patriot Lithium vs. Ras Technology Holdings |
| Sky Metals vs. Northern Star Resources | Sky Metals vs. Evolution Mining | Sky Metals vs. Bluescope Steel | Sky Metals vs. Sandfire Resources NL |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |