Correlation Between LithiumBank Resources and Boot Barn

Can any of the company-specific risk be diversified away by investing in both LithiumBank Resources and Boot Barn 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 LithiumBank Resources and Boot Barn into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LithiumBank Resources Corp and Boot Barn Holdings, you can compare the effects of market volatilities on LithiumBank Resources and Boot Barn 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 LithiumBank Resources with a short position of Boot Barn. Check out your portfolio center. Please also check ongoing floating volatility patterns of LithiumBank Resources and Boot Barn.

Diversification Opportunities for LithiumBank Resources and Boot Barn

0.69

Correlation Coefficient

LithiumBank Resources  Boot Barn

Poor diversification

The 3 months correlation between LithiumBank and Boot is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LithiumBank Resources Corp and Boot Barn Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boot Barn Holdings and LithiumBank 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 LithiumBank Resources Corp are associated (or correlated) with Boot Barn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boot Barn Holdings has no effect on the direction of LithiumBank Resources i.e., LithiumBank Resources and Boot Barn go up and down completely randomly.

Pair Corralation between LithiumBank Resources and Boot Barn

Assuming the 90 days horizon LithiumBank Resources is expected to generate 1.63 times less return on investment than Boot Barn. In addition to that, LithiumBank Resources is 1.62 times more volatile than Boot Barn Holdings. It trades about 0.02 of its total potential returns per unit of risk. Boot Barn Holdings is currently generating about 0.05 per unit of volatility. If you would invest  14,545  in Boot Barn Holdings on September 24, 2024 and sell it today you would earn a total of  307.00  from holding Boot Barn Holdings or generate 2.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

LithiumBank Resources Corp  vs.  Boot Barn Holdings

LithiumBank Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LithiumBank Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Boot Barn Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boot Barn Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with LithiumBank Resources and Boot Barn

The main advantage of trading using opposite LithiumBank Resources and Boot Barn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LithiumBank Resources position performs unexpectedly, Boot Barn 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 Boot Barn will offset losses from the drop in Boot Barn's long position.

The idea behind LithiumBank Resources Corp and Boot Barn Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.