Correlation Between West High and Standard Lithium
Can any of the company-specific risk be diversified away by investing in both West High and Standard 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 West High and Standard Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between West High Yield and Standard Lithium, you can compare the effects of market volatilities on West High and Standard 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 West High with a short position of Standard Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of West High and Standard Lithium.
Diversification Opportunities for West High and Standard Lithium
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between West and Standard is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding West High Yield and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium and West High 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 West High Yield are associated (or correlated) with Standard Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Lithium has no effect on the direction of West High i.e., West High and Standard Lithium go up and down completely randomly.
Pair Corralation between West High and Standard Lithium
Assuming the 90 days horizon West High Yield is expected to generate 1.1 times more return on investment than Standard Lithium. However, West High is 1.1 times more volatile than Standard Lithium. It trades about 0.01 of its potential returns per unit of risk. Standard Lithium is currently generating about -0.01 per unit of risk. If you would invest 33.00 in West High Yield on August 29, 2024 and sell it today you would lose (13.00) from holding West High Yield or give up 39.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
West High Yield vs. Standard Lithium
Performance |
| Timeline |
| West High Yield |
| Standard Lithium |
West High and Standard Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with West High and Standard Lithium
The main advantage of trading using opposite West High and Standard Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if West High position performs unexpectedly, Standard 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 Standard Lithium will offset losses from the drop in Standard Lithium's long position.| West High vs. Ascendant Resources | West High vs. Cantex Mine Development | West High vs. Amarc Resources | West High vs. Sterling Metals Corp |
| Standard Lithium vs. Vale SA ADR | Standard Lithium vs. BHP Group Limited | Standard Lithium vs. Glencore PLC ADR | Standard Lithium vs. Piedmont Lithium Ltd |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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