Correlation Between Carnegie Clean and Core Lithium
Can any of the company-specific risk be diversified away by investing in both Carnegie Clean and Core 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 Carnegie Clean and Core Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnegie Clean Energy and Core Lithium, you can compare the effects of market volatilities on Carnegie Clean and Core 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 Carnegie Clean with a short position of Core Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and Core Lithium.
Diversification Opportunities for Carnegie Clean and Core Lithium
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Carnegie and Core is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Core Lithium go up and down completely randomly.
Pair Corralation between Carnegie Clean and Core Lithium
Assuming the 90 days trading horizon Carnegie Clean Energy is expected to generate 1.41 times more return on investment than Core Lithium. However, Carnegie Clean is 1.41 times more volatile than Core Lithium. It trades about -0.09 of its potential returns per unit of risk. Core Lithium is currently generating about -0.38 per unit of risk. If you would invest 4.00 in Carnegie Clean Energy on September 26, 2024 and sell it today you would lose (0.20) from holding Carnegie Clean Energy or give up 5.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Carnegie Clean Energy vs. Core Lithium
Performance |
Timeline |
Carnegie Clean Energy |
Core Lithium |
Carnegie Clean and Core Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carnegie Clean and Core Lithium
The main advantage of trading using opposite Carnegie Clean and Core Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnegie Clean position performs unexpectedly, Core 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 Core Lithium will offset losses from the drop in Core Lithium's long position.Carnegie Clean vs. Jupiter Energy | Carnegie Clean vs. WA1 Resources | Carnegie Clean vs. Predictive Discovery | Carnegie Clean vs. Mindax Limited |
Core Lithium vs. Carnegie Clean Energy | Core Lithium vs. Bisalloy Steel Group | Core Lithium vs. EROAD | Core Lithium vs. Carawine Resources Limited |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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