Correlation Between International Lithium and Decade Resources
Can any of the company-specific risk be diversified away by investing in both International Lithium and Decade 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 International Lithium and Decade Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Lithium Corp and Decade Resources, you can compare the effects of market volatilities on International Lithium and Decade 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 International Lithium with a short position of Decade Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Lithium and Decade Resources.
Diversification Opportunities for International Lithium and Decade Resources
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between International and Decade is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding International Lithium Corp and Decade Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decade Resources and International Lithium 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 International Lithium Corp are associated (or correlated) with Decade Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decade Resources has no effect on the direction of International Lithium i.e., International Lithium and Decade Resources go up and down completely randomly.
Pair Corralation between International Lithium and Decade Resources
Assuming the 90 days horizon International Lithium is expected to generate 1.02 times less return on investment than Decade Resources. But when comparing it to its historical volatility, International Lithium Corp is 1.24 times less risky than Decade Resources. It trades about 0.05 of its potential returns per unit of risk. Decade Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Decade Resources on September 6, 2024 and sell it today you would lose (0.40) from holding Decade Resources or give up 11.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
International Lithium Corp vs. Decade Resources
Performance |
Timeline |
International Lithium |
Decade Resources |
International Lithium and Decade Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with International Lithium and Decade Resources
The main advantage of trading using opposite International Lithium and Decade Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Lithium position performs unexpectedly, Decade 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 Decade Resources will offset losses from the drop in Decade Resources' long position.International Lithium vs. Qubec Nickel Corp | International Lithium vs. Avarone Metals | International Lithium vs. Elcora Advanced Materials |
Decade Resources vs. Qubec Nickel Corp | Decade Resources vs. Avarone Metals | Decade Resources vs. Elcora Advanced Materials |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance |