Correlation Between Sigma Lithium and Major Precious
Can any of the company-specific risk be diversified away by investing in both Sigma Lithium and Major Precious 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 Major Precious 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 Major Precious Metals, you can compare the effects of market volatilities on Sigma Lithium and Major Precious 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 Major Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Lithium and Major Precious.
Diversification Opportunities for Sigma Lithium and Major Precious
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sigma and Major is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Lithium Resources and Major Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Precious 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 Major Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Precious Metals has no effect on the direction of Sigma Lithium i.e., Sigma Lithium and Major Precious go up and down completely randomly.
Pair Corralation between Sigma Lithium and Major Precious
Given the investment horizon of 90 days Sigma Lithium Resources is expected to under-perform the Major Precious. But the stock apears to be less risky and, when comparing its historical volatility, Sigma Lithium Resources is 13.25 times less risky than Major Precious. The stock trades about -0.02 of its potential returns per unit of risk. The Major Precious Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.40 in Major Precious Metals on September 3, 2024 and sell it today you would lose (0.39) from holding Major Precious Metals or give up 97.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 96.57% |
| Values | Daily Returns |
Sigma Lithium Resources vs. Major Precious Metals
Performance |
| Timeline |
| Sigma Lithium Resources |
| Major Precious Metals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sigma Lithium and Major Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sigma Lithium and Major Precious
The main advantage of trading using opposite Sigma Lithium and Major Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sigma Lithium position performs unexpectedly, Major Precious 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 Major Precious will offset losses from the drop in Major Precious' 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 |
| Major Precious vs. Lithium Americas Corp | Major Precious vs. Sigma Lithium Resources | Major Precious vs. Standard Lithium | Major Precious vs. Sayona Mining 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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