Correlation Between Sprott Junior and IShares Lithium
Can any of the company-specific risk be diversified away by investing in both Sprott Junior and IShares 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 Sprott Junior and IShares Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Junior Uranium and iShares Lithium Miners, you can compare the effects of market volatilities on Sprott Junior and IShares 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 Sprott Junior with a short position of IShares Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Junior and IShares Lithium.
Diversification Opportunities for Sprott Junior and IShares Lithium
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sprott and IShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Junior Uranium and iShares Lithium Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Lithium Miners and Sprott Junior 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 Sprott Junior Uranium are associated (or correlated) with IShares Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Lithium Miners has no effect on the direction of Sprott Junior i.e., Sprott Junior and IShares Lithium go up and down completely randomly.
Pair Corralation between Sprott Junior and IShares Lithium
Given the investment horizon of 90 days Sprott Junior Uranium is expected to generate 20.03 times more return on investment than IShares Lithium. However, Sprott Junior is 20.03 times more volatile than iShares Lithium Miners. It trades about 0.05 of its potential returns per unit of risk. iShares Lithium Miners is currently generating about -0.08 per unit of risk. If you would invest 0.00 in Sprott Junior Uranium on August 25, 2024 and sell it today you would earn a total of 2,415 from holding Sprott Junior Uranium or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 78.6% |
| Values | Daily Returns |
Sprott Junior Uranium vs. iShares Lithium Miners
Performance |
| Timeline |
| Sprott Junior Uranium |
| iShares Lithium Miners |
Sprott Junior and IShares Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Junior and IShares Lithium
The main advantage of trading using opposite Sprott Junior and IShares Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Junior position performs unexpectedly, IShares 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 IShares Lithium will offset losses from the drop in IShares Lithium's long position.| Sprott Junior vs. Sprott Junior Copper | Sprott Junior vs. Sprott Energy Transition | Sprott Junior vs. Sprott Lithium Miners | Sprott Junior vs. Sprott Uranium Miners |
| IShares Lithium vs. Sprott Junior Copper | IShares Lithium vs. Sprott Junior Uranium | IShares Lithium vs. Sprott Nickel Miners |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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