Correlation Between Sigma Lithium and Patriot Battery
Can any of the company-specific risk be diversified away by investing in both Sigma Lithium and Patriot Battery 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 Patriot Battery 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 Patriot Battery Metals, you can compare the effects of market volatilities on Sigma Lithium and Patriot Battery 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 Patriot Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Lithium and Patriot Battery.
Diversification Opportunities for Sigma Lithium and Patriot Battery
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sigma and Patriot is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Lithium Resources and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery Metals 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 Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of Sigma Lithium i.e., Sigma Lithium and Patriot Battery go up and down completely randomly.
Pair Corralation between Sigma Lithium and Patriot Battery
Given the investment horizon of 90 days Sigma Lithium Resources is expected to generate 0.72 times more return on investment than Patriot Battery. However, Sigma Lithium Resources is 1.39 times less risky than Patriot Battery. It trades about -0.12 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about -0.1 per unit of risk. If you would invest 1,359 in Sigma Lithium Resources on September 13, 2024 and sell it today you would lose (139.00) from holding Sigma Lithium Resources or give up 10.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sigma Lithium Resources vs. Patriot Battery Metals
Performance |
| Timeline |
| Sigma Lithium Resources |
| Patriot Battery Metals |
Sigma Lithium and Patriot Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sigma Lithium and Patriot Battery
The main advantage of trading using opposite Sigma Lithium and Patriot Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sigma Lithium position performs unexpectedly, Patriot Battery 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 Patriot Battery will offset losses from the drop in Patriot Battery'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 |
| Patriot Battery vs. Qubec Nickel Corp | Patriot Battery vs. IGO Limited | Patriot Battery vs. Focus Graphite | Patriot Battery vs. Mineral Res |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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