Correlation Between Foremost Lithium and Dakota Gold

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

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

Diversification Opportunities for Foremost Lithium and Dakota Gold

-0.11

Correlation Coefficient

Foremost Lithium  Dakota Gold

Good diversification

The 3 months correlation between Foremost and Dakota is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Foremost Lithium Resource and Dakota Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dakota Gold Corp and Foremost Lithium 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 Foremost Lithium Resource are associated (or correlated) with Dakota Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dakota Gold Corp has no effect on the direction of Foremost Lithium i.e., Foremost Lithium and Dakota Gold go up and down completely randomly.

Pair Corralation between Foremost Lithium and Dakota Gold

Given the investment horizon of 90 days Foremost Lithium Resource is expected to under-perform the Dakota Gold. In addition to that, Foremost Lithium is 1.21 times more volatile than Dakota Gold Corp. It trades about -0.04 of its total potential returns per unit of risk. Dakota Gold Corp is currently generating about 0.11 per unit of volatility. If you would invest  215.00  in Dakota Gold Corp on March 12, 2024 and sell it today you would earn a total of  54.13  from holding Dakota Gold Corp or generate 25.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Foremost Lithium Resource  vs.  Dakota Gold Corp

Foremost Lithium Resource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foremost Lithium Resource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Dakota Gold Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dakota Gold Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Dakota Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Foremost Lithium and Dakota Gold

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

The idea behind Foremost Lithium Resource and Dakota Gold Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.