Correlation Between MetalsGrove Mining and Liontown Resources

Can any of the company-specific risk be diversified away by investing in both MetalsGrove Mining and Liontown 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 MetalsGrove Mining and Liontown Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MetalsGrove Mining and Liontown Resources, you can compare the effects of market volatilities on MetalsGrove Mining and Liontown 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 MetalsGrove Mining with a short position of Liontown Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetalsGrove Mining and Liontown Resources.

Diversification Opportunities for MetalsGrove Mining and Liontown Resources

0.19

Correlation Coefficient

MetalsGrove Mining  Liontown Resources

Average diversification

The 3 months correlation between MetalsGrove and Liontown is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding MetalsGrove Mining and Liontown Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontown Resources and MetalsGrove Mining 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 MetalsGrove Mining are associated (or correlated) with Liontown Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontown Resources has no effect on the direction of MetalsGrove Mining i.e., MetalsGrove Mining and Liontown Resources go up and down completely randomly.

Pair Corralation between MetalsGrove Mining and Liontown Resources

Assuming the 90 days trading horizon MetalsGrove Mining is expected to generate 3.2 times less return on investment than Liontown Resources. But when comparing it to its historical volatility, MetalsGrove Mining is 1.31 times less risky than Liontown Resources. It trades about 0.03 of its potential returns per unit of risk. Liontown Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Liontown Resources on December 25, 2024 and sell it today you would earn a total of  10.00  from holding Liontown Resources or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MetalsGrove Mining  vs.  Liontown Resources

MetalsGrove Mining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MetalsGrove Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MetalsGrove Mining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Liontown Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Liontown Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Liontown Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MetalsGrove Mining and Liontown Resources

The main advantage of trading using opposite MetalsGrove Mining and Liontown Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetalsGrove Mining position performs unexpectedly, Liontown 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 Liontown Resources will offset losses from the drop in Liontown Resources' long position.

The idea behind MetalsGrove Mining and Liontown Resources 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.