Correlation Between Intrepid Metals and Stria Lithium

Can any of the company-specific risk be diversified away by investing in both Intrepid Metals 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 Intrepid Metals and Stria Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intrepid Metals Corp and Stria Lithium, you can compare the effects of market volatilities on Intrepid Metals 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 Intrepid Metals with a short position of Stria Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intrepid Metals and Stria Lithium.

Diversification Opportunities for Intrepid Metals and Stria Lithium

0.41

Correlation Coefficient

Intrepid Metals  Stria Lithium

Very weak diversification

The 3 months correlation between Intrepid and Stria is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Metals Corp and Stria Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stria Lithium and Intrepid Metals 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 Intrepid Metals Corp 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 Intrepid Metals i.e., Intrepid Metals and Stria Lithium go up and down completely randomly.

Pair Corralation between Intrepid Metals and Stria Lithium

Assuming the 90 days horizon Intrepid Metals is expected to generate 6.53 times less return on investment than Stria Lithium. But when comparing it to its historical volatility, Intrepid Metals Corp is 4.03 times less risky than Stria Lithium. It trades about 0.08 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 29, 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	95.31%
Values	Daily Returns

Intrepid Metals Corp  vs.  Stria Lithium

Intrepid Metals Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Metals Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Intrepid Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Stria Lithium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stria Lithium are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Stria Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intrepid Metals and Stria Lithium

The main advantage of trading using opposite Intrepid Metals and Stria Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intrepid Metals 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.

The idea behind Intrepid Metals Corp and Stria Lithium 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.