Correlation Between Pure Energy and Sigma Lithium
Can any of the company-specific risk be diversified away by investing in both Pure Energy and Sigma 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 Pure Energy and Sigma Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Energy Minerals and Sigma Lithium Resources, you can compare the effects of market volatilities on Pure Energy and Sigma 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 Pure Energy with a short position of Sigma Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Energy and Sigma Lithium.
Diversification Opportunities for Pure Energy and Sigma Lithium
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pure and Sigma is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pure Energy Minerals and Sigma Lithium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigma Lithium Resources and Pure Energy 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 Pure Energy Minerals are associated (or correlated) with Sigma Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigma Lithium Resources has no effect on the direction of Pure Energy i.e., Pure Energy and Sigma Lithium go up and down completely randomly.
Pair Corralation between Pure Energy and Sigma Lithium
Given the investment horizon of 90 days Pure Energy Minerals is expected to under-perform the Sigma Lithium. In addition to that, Pure Energy is 1.66 times more volatile than Sigma Lithium Resources. It trades about -0.05 of its total potential returns per unit of risk. Sigma Lithium Resources is currently generating about -0.05 per unit of volatility. If you would invest 1,921 in Sigma Lithium Resources on December 1, 2024 and sell it today you would lose (286.00) from holding Sigma Lithium Resources or give up 14.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Energy Minerals vs. Sigma Lithium Resources
Performance |
| Timeline |
| Pure Energy Minerals |
| Sigma Lithium Resources |
Pure Energy and Sigma Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Energy and Sigma Lithium
The main advantage of trading using opposite Pure Energy and Sigma Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Energy position performs unexpectedly, Sigma 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 Sigma Lithium will offset losses from the drop in Sigma Lithium's long position.| Pure Energy vs. Nevada Sunrise Gold | Pure Energy vs. Rock Tech Lithium | Pure Energy vs. Sienna Resources | Pure Energy vs. American Lithium 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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