Correlation Between BHP Group and Stria Lithium
Can any of the company-specific risk be diversified away by investing in both BHP Group and Stria 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 BHP Group and Stria Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and Stria Lithium, you can compare the effects of market volatilities on BHP Group and Stria 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 BHP Group with a short position of Stria Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Stria Lithium.
Diversification Opportunities for BHP Group and Stria Lithium
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BHP and Stria is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Stria Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stria Lithium and BHP Group 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 BHP Group Limited are associated (or correlated) with Stria Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stria Lithium has no effect on the direction of BHP Group i.e., BHP Group and Stria Lithium go up and down completely randomly.
Pair Corralation between BHP Group and Stria Lithium
Considering the 90-day investment horizon BHP Group is expected to generate 50.72 times less return on investment than Stria Lithium. But when comparing it to its historical volatility, BHP Group Limited is 18.09 times less risky than Stria Lithium. It trades about 0.05 of its potential returns per unit of risk. Stria Lithium is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4.14 in Stria Lithium on December 27, 2024 and sell it today you would earn a total of 6.86 from holding Stria Lithium or generate 165.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
BHP Group Limited vs. Stria Lithium
Performance |
Timeline |
BHP Group Limited |
Stria Lithium |
BHP Group and Stria Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BHP Group and Stria Lithium
The main advantage of trading using opposite BHP Group and Stria Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Stria 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 Stria Lithium will offset losses from the drop in Stria Lithium's long position.BHP Group vs. Vale SA ADR | BHP Group vs. Teck Resources Ltd | BHP Group vs. Lithium Americas Corp | BHP Group vs. MP Materials Corp |
Stria Lithium vs. Intrepid Metals Corp | Stria Lithium vs. Group Ten Metals | Stria Lithium vs. Lotus Resources Limited | Stria Lithium vs. Golden Goliath Resources |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |