Correlation Between Sigma Lithium and EMX Royalty
Can any of the company-specific risk be diversified away by investing in both Sigma Lithium and EMX Royalty 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 Sigma Lithium and EMX Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sigma Lithium Resources and EMX Royalty Corp, you can compare the effects of market volatilities on Sigma Lithium and EMX Royalty 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 Sigma Lithium with a short position of EMX Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Lithium and EMX Royalty.
Diversification Opportunities for Sigma Lithium and EMX Royalty
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sigma and EMX is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Lithium Resources and EMX Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMX Royalty Corp and Sigma 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 Sigma Lithium Resources are associated (or correlated) with EMX Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMX Royalty Corp has no effect on the direction of Sigma Lithium i.e., Sigma Lithium and EMX Royalty go up and down completely randomly.
Pair Corralation between Sigma Lithium and EMX Royalty
Given the investment horizon of 90 days Sigma Lithium Resources is expected to under-perform the EMX Royalty. In addition to that, Sigma Lithium is 1.76 times more volatile than EMX Royalty Corp. It trades about -0.02 of its total potential returns per unit of risk. EMX Royalty Corp is currently generating about 0.0 per unit of volatility. If you would invest 196.00 in EMX Royalty Corp on September 28, 2024 and sell it today you would lose (22.00) from holding EMX Royalty Corp or give up 11.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sigma Lithium Resources vs. EMX Royalty Corp
Performance |
| Timeline |
| Sigma Lithium Resources |
| EMX Royalty Corp |
Sigma Lithium and EMX Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sigma Lithium and EMX Royalty
The main advantage of trading using opposite Sigma Lithium and EMX Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sigma Lithium position performs unexpectedly, EMX Royalty 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 EMX Royalty will offset losses from the drop in EMX Royalty's long position.| Sigma Lithium vs. Piedmont Lithium Ltd | Sigma Lithium vs. Standard Lithium | Sigma Lithium vs. MP Materials Corp | Sigma Lithium vs. Vale SA ADR |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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