Correlation Between Standard Lithium and Skeena Resources
Can any of the company-specific risk be diversified away by investing in both Standard Lithium and Skeena Resources 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 Skeena Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Lithium and Skeena Resources, you can compare the effects of market volatilities on Standard Lithium and Skeena Resources 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 Skeena Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Lithium and Skeena Resources.
Diversification Opportunities for Standard Lithium and Skeena Resources
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Standard and Skeena is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Standard Lithium and Skeena Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skeena Resources 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 Skeena Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skeena Resources has no effect on the direction of Standard Lithium i.e., Standard Lithium and Skeena Resources go up and down completely randomly.
Pair Corralation between Standard Lithium and Skeena Resources
Considering the 90-day investment horizon Standard Lithium is expected to under-perform the Skeena Resources. In addition to that, Standard Lithium is 1.27 times more volatile than Skeena Resources. It trades about -0.26 of its total potential returns per unit of risk. Skeena Resources is currently generating about -0.05 per unit of volatility. If you would invest 984.00 in Skeena Resources on August 29, 2024 and sell it today you would lose (62.00) from holding Skeena Resources or give up 6.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Lithium vs. Skeena Resources
Performance |
| Timeline |
| Standard Lithium |
| Skeena Resources |
Standard Lithium and Skeena Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Lithium and Skeena Resources
The main advantage of trading using opposite Standard Lithium and Skeena Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Lithium position performs unexpectedly, Skeena Resources 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 Skeena Resources will offset losses from the drop in Skeena Resources' 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 |
| Skeena Resources vs. Materion | Skeena Resources vs. Compass Minerals International | Skeena Resources vs. IperionX Limited American | Skeena Resources vs. EMX Royalty Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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