Correlation Between Pilbara Minerals and Standard Lithium
Can any of the company-specific risk be diversified away by investing in both Pilbara Minerals and Standard 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 Pilbara Minerals and Standard Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pilbara Minerals Limited and Standard Lithium, you can compare the effects of market volatilities on Pilbara Minerals and Standard 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 Pilbara Minerals with a short position of Standard Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pilbara Minerals and Standard Lithium.
Diversification Opportunities for Pilbara Minerals and Standard Lithium
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pilbara and Standard is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pilbara Minerals Limited and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium and Pilbara Minerals 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 Pilbara Minerals Limited are associated (or correlated) with Standard Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Lithium has no effect on the direction of Pilbara Minerals i.e., Pilbara Minerals and Standard Lithium go up and down completely randomly.
Pair Corralation between Pilbara Minerals and Standard Lithium
Assuming the 90 days horizon Pilbara Minerals Limited is expected to under-perform the Standard Lithium. But the pink sheet apears to be less risky and, when comparing its historical volatility, Pilbara Minerals Limited is 1.66 times less risky than Standard Lithium. The pink sheet trades about -0.57 of its potential returns per unit of risk. The Standard Lithium is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 196.00 in Standard Lithium on September 13, 2024 and sell it today you would lose (34.00) from holding Standard Lithium or give up 17.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pilbara Minerals Limited vs. Standard Lithium
Performance |
| Timeline |
| Pilbara Minerals |
| Standard Lithium |
Pilbara Minerals and Standard Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pilbara Minerals and Standard Lithium
The main advantage of trading using opposite Pilbara Minerals and Standard Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pilbara Minerals position performs unexpectedly, Standard 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 Standard Lithium will offset losses from the drop in Standard Lithium's long position.| Pilbara Minerals vs. Qubec Nickel Corp | Pilbara Minerals vs. IGO Limited | Pilbara Minerals vs. Focus Graphite | Pilbara Minerals vs. Mineral Res |
| Standard Lithium vs. MP Materials Corp | Standard Lithium vs. NioCorp Developments Ltd | Standard Lithium vs. Vale SA ADR | Standard Lithium vs. Vizsla Resources 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |