Correlation Between Westwater Resources and Standard Lithium
Can any of the company-specific risk be diversified away by investing in both Westwater Resources 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 Westwater Resources and Standard Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwater Resources and Standard Lithium, you can compare the effects of market volatilities on Westwater Resources 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 Westwater Resources with a short position of Standard Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwater Resources and Standard Lithium.
Diversification Opportunities for Westwater Resources and Standard Lithium
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westwater and Standard is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Westwater Resources and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium and Westwater Resources 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 Westwater Resources 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 Westwater Resources i.e., Westwater Resources and Standard Lithium go up and down completely randomly.
Pair Corralation between Westwater Resources and Standard Lithium
Considering the 90-day investment horizon Westwater Resources is expected to generate 0.58 times more return on investment than Standard Lithium. However, Westwater Resources is 1.73 times less risky than Standard Lithium. It trades about -0.04 of its potential returns per unit of risk. Standard Lithium is currently generating about -0.36 per unit of risk. If you would invest 61.00 in Westwater Resources on August 31, 2024 and sell it today you would lose (2.00) from holding Westwater Resources or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwater Resources vs. Standard Lithium
Performance |
| Timeline |
| Westwater Resources |
| Standard Lithium |
Westwater Resources and Standard Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwater Resources and Standard Lithium
The main advantage of trading using opposite Westwater Resources and Standard Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwater Resources 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.| Westwater Resources vs. Mason Graphite | Westwater Resources vs. Northern Graphite | Westwater Resources vs. Graphite One | Westwater Resources vs. Lomiko Metals |
| Standard Lithium vs. Lithium Americas Corp | Standard Lithium vs. Piedmont Lithium Ltd | Standard Lithium vs. NioCorp Developments Ltd | Standard Lithium vs. Teck Resources 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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