Correlation Between Standard Lithium and Anglo American
Can any of the company-specific risk be diversified away by investing in both Standard Lithium and Anglo American 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 Standard Lithium and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Lithium and Anglo American plc, you can compare the effects of market volatilities on Standard Lithium and Anglo American 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 Standard Lithium with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Lithium and Anglo American.
Diversification Opportunities for Standard Lithium and Anglo American
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Standard and Anglo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Standard Lithium and Anglo American plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American plc and Standard 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 Standard Lithium are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American plc has no effect on the direction of Standard Lithium i.e., Standard Lithium and Anglo American go up and down completely randomly.
Pair Corralation between Standard Lithium and Anglo American
Considering the 90-day investment horizon Standard Lithium is expected to generate 5.62 times less return on investment than Anglo American. In addition to that, Standard Lithium is 1.57 times more volatile than Anglo American plc. It trades about 0.0 of its total potential returns per unit of risk. Anglo American plc is currently generating about 0.04 per unit of volatility. If you would invest 2,527 in Anglo American plc on August 29, 2024 and sell it today you would earn a total of 473.00 from holding Anglo American plc or generate 18.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.25% |
| Values | Daily Returns |
Standard Lithium vs. Anglo American plc
Performance |
| Timeline |
| Standard Lithium |
| Anglo American plc |
Standard Lithium and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Lithium and Anglo American
The main advantage of trading using opposite Standard Lithium and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Lithium position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| Standard Lithium vs. Lithium Americas Corp | Standard Lithium vs. Piedmont Lithium Ltd | Standard Lithium vs. NioCorp Developments Ltd | Standard Lithium vs. Teck Resources Ltd |
| Anglo American vs. Glencore PLC ADR | Anglo American vs. Fortescue Metals Group | Anglo American vs. South32 Limited | Anglo American vs. South32 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |