Correlation Between Western Investment and LithiumBank Resources
Can any of the company-specific risk be diversified away by investing in both Western Investment and LithiumBank Resources 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 Western Investment and LithiumBank Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and LithiumBank Resources Corp, you can compare the effects of market volatilities on Western Investment and LithiumBank Resources 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 Western Investment with a short position of LithiumBank Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and LithiumBank Resources.
Diversification Opportunities for Western Investment and LithiumBank Resources
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and LithiumBank is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank Resources and Western Investment 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 Western Investment are associated (or correlated) with LithiumBank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LithiumBank Resources has no effect on the direction of Western Investment i.e., Western Investment and LithiumBank Resources go up and down completely randomly.
Pair Corralation between Western Investment and LithiumBank Resources
Given the investment horizon of 90 days Western Investment is expected to generate 0.97 times more return on investment than LithiumBank Resources. However, Western Investment is 1.03 times less risky than LithiumBank Resources. It trades about 0.05 of its potential returns per unit of risk. LithiumBank Resources Corp is currently generating about -0.15 per unit of risk. If you would invest 42.00 in Western Investment on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Western Investment or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Western Investment vs. LithiumBank Resources Corp
Performance |
| Timeline |
| Western Investment |
| LithiumBank Resources |
Western Investment and LithiumBank Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and LithiumBank Resources
The main advantage of trading using opposite Western Investment and LithiumBank Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment position performs unexpectedly, LithiumBank Resources 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 LithiumBank Resources will offset losses from the drop in LithiumBank Resources' long position.| Western Investment vs. Westshore Terminals Investment | Western Investment vs. Faction Investment Group | Western Investment vs. Economic Investment Trust | Western Investment vs. CNJ Capital Investments |
| LithiumBank Resources vs. Foraco International SA | LithiumBank Resources vs. Geodrill Limited | LithiumBank Resources vs. Major Drilling Group | LithiumBank Resources vs. Bri Chem Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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