Correlation Between Sienna Resources and Lithium Ionic
Can any of the company-specific risk be diversified away by investing in both Sienna Resources and Lithium Ionic 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 Sienna Resources and Lithium Ionic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sienna Resources and Lithium Ionic Corp, you can compare the effects of market volatilities on Sienna Resources and Lithium Ionic 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 Sienna Resources with a short position of Lithium Ionic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sienna Resources and Lithium Ionic.
Diversification Opportunities for Sienna Resources and Lithium Ionic
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sienna and Lithium is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Resources and Lithium Ionic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Ionic Corp and Sienna 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 Sienna Resources are associated (or correlated) with Lithium Ionic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Ionic Corp has no effect on the direction of Sienna Resources i.e., Sienna Resources and Lithium Ionic go up and down completely randomly.
Pair Corralation between Sienna Resources and Lithium Ionic
Assuming the 90 days horizon Sienna Resources is expected to generate 2.13 times more return on investment than Lithium Ionic. However, Sienna Resources is 2.13 times more volatile than Lithium Ionic Corp. It trades about 0.13 of its potential returns per unit of risk. Lithium Ionic Corp is currently generating about 0.03 per unit of risk. If you would invest 2.14 in Sienna Resources on December 1, 2024 and sell it today you would earn a total of 1.36 from holding Sienna Resources or generate 63.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 96.77% |
Values | Daily Returns |
Sienna Resources vs. Lithium Ionic Corp
Performance |
Timeline |
Sienna Resources |
Lithium Ionic Corp |
Sienna Resources and Lithium Ionic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sienna Resources and Lithium Ionic
The main advantage of trading using opposite Sienna Resources and Lithium Ionic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sienna Resources position performs unexpectedly, Lithium Ionic 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 Ionic will offset losses from the drop in Lithium Ionic's long position.Sienna Resources vs. Norra Metals Corp | Sienna Resources vs. E79 Resources Corp | Sienna Resources vs. Voltage Metals Corp | Sienna Resources vs. Cantex Mine Development |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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