Correlation Between Invesco Physical and CleanTech Lithium

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

By analyzing existing cross correlation between Invesco Physical Silver and CleanTech Lithium plc, you can compare the effects of market volatilities on Invesco Physical and CleanTech 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 Invesco Physical with a short position of CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Physical and CleanTech Lithium.

Diversification Opportunities for Invesco Physical and CleanTech Lithium

-0.52

Correlation Coefficient

Invesco Physical  CleanTech Lithium

Excellent diversification

The 3 months correlation between Invesco and CleanTech is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Physical Silver and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc and Invesco Physical 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 Invesco Physical Silver are associated (or correlated) with CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Invesco Physical i.e., Invesco Physical and CleanTech Lithium go up and down completely randomly.

Pair Corralation between Invesco Physical and CleanTech Lithium

Assuming the 90 days trading horizon Invesco Physical Silver is expected to generate 0.41 times more return on investment than CleanTech Lithium. However, Invesco Physical Silver is 2.42 times less risky than CleanTech Lithium. It trades about 0.07 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.18 per unit of risk. If you would invest  2,724  in Invesco Physical Silver on September 1, 2024 and sell it today you would earn a total of  209.00  from holding Invesco Physical Silver or generate 7.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Invesco Physical Silver  vs.  CleanTech Lithium plc

Invesco Physical Silver

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Physical Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Invesco Physical may actually be approaching a critical reversion point that can send shares even higher in December 2024.

CleanTech Lithium plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CleanTech Lithium plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Invesco Physical and CleanTech Lithium

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

The idea behind Invesco Physical Silver and CleanTech Lithium plc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.