Correlation Between Solitario Exploration and Standard Lithium
Can any of the company-specific risk be diversified away by investing in both Solitario Exploration 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 Solitario Exploration and Standard Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solitario Exploration Royalty and Standard Lithium, you can compare the effects of market volatilities on Solitario Exploration 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 Solitario Exploration with a short position of Standard Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solitario Exploration and Standard Lithium.
Diversification Opportunities for Solitario Exploration and Standard Lithium
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solitario and Standard is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Solitario Exploration Royalty and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium and Solitario Exploration 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 Solitario Exploration Royalty 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 Solitario Exploration i.e., Solitario Exploration and Standard Lithium go up and down completely randomly.
Pair Corralation between Solitario Exploration and Standard Lithium
Considering the 90-day investment horizon Solitario Exploration Royalty is expected to generate 0.6 times more return on investment than Standard Lithium. However, Solitario Exploration Royalty is 1.68 times less risky than Standard Lithium. It trades about -0.18 of its potential returns per unit of risk. Standard Lithium is currently generating about -0.23 per unit of risk. If you would invest 69.00 in Solitario Exploration Royalty on August 27, 2024 and sell it today you would lose (8.00) from holding Solitario Exploration Royalty or give up 11.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solitario Exploration Royalty vs. Standard Lithium
Performance |
| Timeline |
| Solitario Exploration |
| Standard Lithium |
Solitario Exploration and Standard Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solitario Exploration and Standard Lithium
The main advantage of trading using opposite Solitario Exploration and Standard Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solitario Exploration 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.| Solitario Exploration vs. Vale SA ADR | Solitario Exploration vs. Teck Resources Ltd | Solitario Exploration vs. BHP Group Limited | Solitario Exploration vs. Glencore PLC ADR |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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