Correlation Between Sprott Uranium and IShares Lithium
Can any of the company-specific risk be diversified away by investing in both Sprott Uranium 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 Uranium 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 Uranium Miners and iShares Lithium Miners, you can compare the effects of market volatilities on Sprott Uranium 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 Uranium with a short position of IShares Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Uranium and IShares Lithium.
Diversification Opportunities for Sprott Uranium and IShares Lithium
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprott and IShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Uranium Miners 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 Uranium 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 Uranium Miners 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 Uranium i.e., Sprott Uranium and IShares Lithium go up and down completely randomly.
Pair Corralation between Sprott Uranium and IShares Lithium
Given the investment horizon of 90 days Sprott Uranium Miners is expected to generate 0.91 times more return on investment than IShares Lithium. However, Sprott Uranium Miners is 1.1 times less risky than IShares Lithium. It trades about -0.09 of its potential returns per unit of risk. iShares Lithium Miners is currently generating about -0.13 per unit of risk. If you would invest 4,960 in Sprott Uranium Miners on August 29, 2024 and sell it today you would lose (236.00) from holding Sprott Uranium Miners or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Uranium Miners vs. iShares Lithium Miners
Performance |
| Timeline |
| Sprott Uranium Miners |
| iShares Lithium Miners |
Sprott Uranium and IShares Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Uranium and IShares Lithium
The main advantage of trading using opposite Sprott Uranium and IShares Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Uranium 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 Uranium vs. Global X Uranium | Sprott Uranium vs. Sprott Physical Uranium | Sprott Uranium vs. Energy Fuels | Sprott Uranium vs. NexGen Energy |
| IShares Lithium vs. First Trust Exchange Traded | IShares Lithium vs. Ultimus Managers Trust | IShares Lithium vs. Horizon Kinetics Medical | IShares Lithium vs. Harbor Health Care |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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