Correlation Between Standard Lithium and American CuMo
Can any of the company-specific risk be diversified away by investing in both Standard Lithium and American CuMo 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 American CuMo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Lithium and American CuMo Mining, you can compare the effects of market volatilities on Standard Lithium and American CuMo 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 American CuMo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Lithium and American CuMo.
Diversification Opportunities for Standard Lithium and American CuMo
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Standard and American is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Standard Lithium and American CuMo Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American CuMo Mining 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 American CuMo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American CuMo Mining has no effect on the direction of Standard Lithium i.e., Standard Lithium and American CuMo go up and down completely randomly.
Pair Corralation between Standard Lithium and American CuMo
Considering the 90-day investment horizon Standard Lithium is expected to generate 0.33 times more return on investment than American CuMo. However, Standard Lithium is 3.01 times less risky than American CuMo. It trades about -0.24 of its potential returns per unit of risk. American CuMo Mining is currently generating about -0.22 per unit of risk. If you would invest 236.00 in Standard Lithium on September 1, 2024 and sell it today you would lose (57.00) from holding Standard Lithium or give up 24.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Standard Lithium vs. American CuMo Mining
Performance |
| Timeline |
| Standard Lithium |
| American CuMo Mining |
Standard Lithium and American CuMo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Lithium and American CuMo
The main advantage of trading using opposite Standard Lithium and American CuMo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Lithium position performs unexpectedly, American CuMo 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 American CuMo will offset losses from the drop in American CuMo's long position.| Standard Lithium vs. NioCorp Developments Ltd | Standard Lithium vs. Teck Resources Ltd | Standard Lithium vs. Sigma Lithium Resources | Standard Lithium vs. MP Materials Corp |
| American CuMo vs. South32 Limited | American CuMo vs. NioCorp Developments Ltd | American CuMo vs. HUMANA INC | American CuMo vs. SCOR PK |
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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