Correlation Between Patagonia Gold and LithiumBank Resources
Can any of the company-specific risk be diversified away by investing in both Patagonia Gold 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 Patagonia Gold and LithiumBank Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patagonia Gold Corp and LithiumBank Resources Corp, you can compare the effects of market volatilities on Patagonia Gold 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 Patagonia Gold with a short position of LithiumBank Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patagonia Gold and LithiumBank Resources.
Diversification Opportunities for Patagonia Gold and LithiumBank Resources
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Patagonia and LithiumBank is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Patagonia Gold Corp and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank Resources and Patagonia Gold 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 Patagonia Gold Corp 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 Patagonia Gold i.e., Patagonia Gold and LithiumBank Resources go up and down completely randomly.
Pair Corralation between Patagonia Gold and LithiumBank Resources
Assuming the 90 days trading horizon Patagonia Gold Corp is expected to generate 2.76 times more return on investment than LithiumBank Resources. However, Patagonia Gold is 2.76 times more volatile than LithiumBank Resources Corp. It trades about 0.04 of its potential returns per unit of risk. LithiumBank Resources Corp is currently generating about -0.16 per unit of risk. If you would invest 4.00 in Patagonia Gold Corp on September 25, 2024 and sell it today you would lose (0.50) from holding Patagonia Gold Corp or give up 12.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Patagonia Gold Corp vs. LithiumBank Resources Corp
Performance |
Timeline |
Patagonia Gold Corp |
LithiumBank Resources |
Patagonia Gold and LithiumBank Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Patagonia Gold and LithiumBank Resources
The main advantage of trading using opposite Patagonia Gold and LithiumBank Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patagonia Gold 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.Patagonia Gold vs. Precipitate Gold Corp | Patagonia Gold vs. Libero Copper Corp | Patagonia Gold vs. Chakana Copper Corp | Patagonia Gold vs. ROKMASTER Resources Corp |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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