Correlation Between E79 Resources and Lithium Energi
Can any of the company-specific risk be diversified away by investing in both E79 Resources and Lithium Energi 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 E79 Resources and Lithium Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E79 Resources Corp and Lithium Energi Exploration, you can compare the effects of market volatilities on E79 Resources and Lithium Energi 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 E79 Resources with a short position of Lithium Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of E79 Resources and Lithium Energi.
Diversification Opportunities for E79 Resources and Lithium Energi
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between E79 and Lithium is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding E79 Resources Corp and Lithium Energi Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Energi Explo and E79 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 E79 Resources Corp are associated (or correlated) with Lithium Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Energi Explo has no effect on the direction of E79 Resources i.e., E79 Resources and Lithium Energi go up and down completely randomly.
Pair Corralation between E79 Resources and Lithium Energi
Assuming the 90 days horizon E79 Resources is expected to generate 1.76 times less return on investment than Lithium Energi. But when comparing it to its historical volatility, E79 Resources Corp is 1.19 times less risky than Lithium Energi. It trades about 0.02 of its potential returns per unit of risk. Lithium Energi Exploration is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8.10 in Lithium Energi Exploration on September 13, 2024 and sell it today you would lose (5.89) from holding Lithium Energi Exploration or give up 72.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.6% |
Values | Daily Returns |
E79 Resources Corp vs. Lithium Energi Exploration
Performance |
Timeline |
E79 Resources Corp |
Lithium Energi Explo |
E79 Resources and Lithium Energi Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with E79 Resources and Lithium Energi
The main advantage of trading using opposite E79 Resources and Lithium Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E79 Resources position performs unexpectedly, Lithium Energi 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 Lithium Energi will offset losses from the drop in Lithium Energi's long position.E79 Resources vs. Qubec Nickel Corp | E79 Resources vs. IGO Limited | E79 Resources vs. Focus Graphite | E79 Resources vs. Mineral Res |
Lithium Energi vs. Qubec Nickel Corp | Lithium Energi vs. IGO Limited | Lithium Energi vs. Focus Graphite | Lithium Energi vs. Mineral Res |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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