Correlation Between Silver Spruce and Core Lithium
Can any of the company-specific risk be diversified away by investing in both Silver Spruce and Core 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 Silver Spruce and Core Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silver Spruce Resources and Core Lithium, you can compare the effects of market volatilities on Silver Spruce and Core 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 Silver Spruce with a short position of Core Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Spruce and Core Lithium.
Diversification Opportunities for Silver Spruce and Core Lithium
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Silver and Core is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Silver Spruce Resources and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium and Silver Spruce 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 Silver Spruce Resources are associated (or correlated) with Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Silver Spruce i.e., Silver Spruce and Core Lithium go up and down completely randomly.
Pair Corralation between Silver Spruce and Core Lithium
Assuming the 90 days horizon Silver Spruce Resources is expected to generate 1.44 times more return on investment than Core Lithium. However, Silver Spruce is 1.44 times more volatile than Core Lithium. It trades about 0.04 of its potential returns per unit of risk. Core Lithium is currently generating about -0.02 per unit of risk. If you would invest 1.20 in Silver Spruce Resources on August 31, 2024 and sell it today you would lose (0.81) from holding Silver Spruce Resources or give up 67.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silver Spruce Resources vs. Core Lithium
Performance |
| Timeline |
| Silver Spruce Resources |
| Core Lithium |
Silver Spruce and Core Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silver Spruce and Core Lithium
The main advantage of trading using opposite Silver Spruce and Core Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Spruce position performs unexpectedly, Core 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 Core Lithium will offset losses from the drop in Core Lithium's long position.| Silver Spruce vs. South32 Limited | Silver Spruce vs. NioCorp Developments Ltd | Silver Spruce vs. HUMANA INC | Silver Spruce vs. SCOR PK |
| Core Lithium vs. Liontown Resources Limited | Core Lithium vs. ATT Inc | Core Lithium vs. Merck Company | Core Lithium vs. Walt Disney |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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