Correlation Between POWR Lithium and Spey Resources
Can any of the company-specific risk be diversified away by investing in both POWR Lithium and Spey Resources 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 POWR Lithium and Spey Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POWR Lithium Corp and Spey Resources Corp, you can compare the effects of market volatilities on POWR Lithium and Spey Resources 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 POWR Lithium with a short position of Spey Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWR Lithium and Spey Resources.
Diversification Opportunities for POWR Lithium and Spey Resources
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between POWR and Spey is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding POWR Lithium Corp and Spey Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spey Resources Corp and POWR 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 POWR Lithium Corp are associated (or correlated) with Spey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spey Resources Corp has no effect on the direction of POWR Lithium i.e., POWR Lithium and Spey Resources go up and down completely randomly.
Pair Corralation between POWR Lithium and Spey Resources
Assuming the 90 days horizon POWR Lithium is expected to generate 2.28 times less return on investment than Spey Resources. But when comparing it to its historical volatility, POWR Lithium Corp is 1.19 times less risky than Spey Resources. It trades about 0.06 of its potential returns per unit of risk. Spey Resources Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Spey Resources Corp on September 12, 2024 and sell it today you would lose (2.00) from holding Spey Resources Corp or give up 13.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
POWR Lithium Corp vs. Spey Resources Corp
Performance |
| Timeline |
| POWR Lithium Corp |
| Spey Resources Corp |
POWR Lithium and Spey Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POWR Lithium and Spey Resources
The main advantage of trading using opposite POWR Lithium and Spey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POWR Lithium position performs unexpectedly, Spey Resources 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 Spey Resources will offset losses from the drop in Spey Resources' long position.| POWR Lithium vs. Copa Holdings SA | POWR Lithium vs. United Airlines Holdings | POWR Lithium vs. Delta Air Lines | POWR Lithium vs. SkyWest |
| Spey Resources vs. Grid Metals Corp | Spey Resources vs. POWR Lithium Corp | Spey Resources vs. First American Silver | Spey Resources vs. IGO Limited |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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