Correlation Between Sigma Lithium and TMC The
Can any of the company-specific risk be diversified away by investing in both Sigma Lithium and TMC The 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 TMC The 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 TMC the metals, you can compare the effects of market volatilities on Sigma Lithium and TMC The 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 TMC The. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Lithium and TMC The.
Diversification Opportunities for Sigma Lithium and TMC The
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sigma and TMC is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Lithium Resources and TMC the metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMC the 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 TMC The. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMC the metals has no effect on the direction of Sigma Lithium i.e., Sigma Lithium and TMC The go up and down completely randomly.
Pair Corralation between Sigma Lithium and TMC The
Given the investment horizon of 90 days Sigma Lithium Resources is expected to under-perform the TMC The. But the stock apears to be less risky and, when comparing its historical volatility, Sigma Lithium Resources is 2.52 times less risky than TMC The. The stock trades about -0.05 of its potential returns per unit of risk. The TMC the metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 13.00 in TMC the metals on November 9, 2024 and sell it today you would earn a total of 6.00 from holding TMC the metals or generate 46.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sigma Lithium Resources vs. TMC the metals
Performance |
| Timeline |
| Sigma Lithium Resources |
| TMC the metals |
Sigma Lithium and TMC The Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sigma Lithium and TMC The
The main advantage of trading using opposite Sigma Lithium and TMC The positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sigma Lithium position performs unexpectedly, TMC The 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 TMC The will offset losses from the drop in TMC The'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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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