Correlation Between SPC Nickel and Nova Lithium
Can any of the company-specific risk be diversified away by investing in both SPC Nickel and Nova Lithium 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 SPC Nickel and Nova Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPC Nickel Corp and Nova Lithium Corp, you can compare the effects of market volatilities on SPC Nickel and Nova Lithium 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 SPC Nickel with a short position of Nova Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPC Nickel and Nova Lithium.
Diversification Opportunities for SPC Nickel and Nova Lithium
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPC and Nova is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SPC Nickel Corp and Nova Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Lithium Corp and SPC Nickel 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 SPC Nickel Corp are associated (or correlated) with Nova Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Lithium Corp has no effect on the direction of SPC Nickel i.e., SPC Nickel and Nova Lithium go up and down completely randomly.
Pair Corralation between SPC Nickel and Nova Lithium
Assuming the 90 days horizon SPC Nickel Corp is expected to under-perform the Nova Lithium. In addition to that, SPC Nickel is 1.91 times more volatile than Nova Lithium Corp. It trades about -0.38 of its total potential returns per unit of risk. Nova Lithium Corp is currently generating about -0.07 per unit of volatility. If you would invest 29.00 in Nova Lithium Corp on August 29, 2024 and sell it today you would lose (3.00) from holding Nova Lithium Corp or give up 10.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SPC Nickel Corp vs. Nova Lithium Corp
Performance |
| Timeline |
| SPC Nickel Corp |
| Nova Lithium Corp |
SPC Nickel and Nova Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPC Nickel and Nova Lithium
The main advantage of trading using opposite SPC Nickel and Nova Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPC Nickel position performs unexpectedly, Nova Lithium 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 Nova Lithium will offset losses from the drop in Nova Lithium's long position.| SPC Nickel vs. Rockridge Resources | SPC Nickel vs. Ameriwest Lithium | SPC Nickel vs. Osisko Metals Incorporated | SPC Nickel vs. Volt Lithium Corp |
| Nova Lithium vs. Apple Inc | Nova Lithium vs. Microsoft | Nova Lithium vs. Alphabet Inc Class C | Nova Lithium vs. Meta Platforms |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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