Correlation Between Imagine Lithium and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Imagine Lithium and NYSE Composite 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 Imagine Lithium and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imagine Lithium and NYSE Composite, you can compare the effects of market volatilities on Imagine Lithium and NYSE Composite 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 Imagine Lithium with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imagine Lithium and NYSE Composite.
Diversification Opportunities for Imagine Lithium and NYSE Composite
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Imagine and NYSE is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Imagine Lithium and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Imagine 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 Imagine Lithium are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Imagine Lithium i.e., Imagine Lithium and NYSE Composite go up and down completely randomly.
Pair Corralation between Imagine Lithium and NYSE Composite
Assuming the 90 days horizon Imagine Lithium is expected to generate 19.12 times more return on investment than NYSE Composite. However, Imagine Lithium is 19.12 times more volatile than NYSE Composite. It trades about 0.06 of its potential returns per unit of risk. NYSE Composite is currently generating about -0.18 per unit of risk. If you would invest 4.00 in Imagine Lithium on January 18, 2024 and sell it today you would earn a total of 0.00 from holding Imagine Lithium or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Imagine Lithium vs. NYSE Composite
Performance |
Timeline |
Imagine Lithium and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Imagine Lithium
Pair trading matchups for Imagine Lithium
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Imagine Lithium and NYSE Composite
The main advantage of trading using opposite Imagine Lithium and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imagine Lithium position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Imagine Lithium vs. Rio2 | Imagine Lithium vs. Zedcor Energy | Imagine Lithium vs. Silver Bear Resources | Imagine Lithium vs. TeraGo Inc |
NYSE Composite vs. Emerson Radio | NYSE Composite vs. Brunswick | NYSE Composite vs. Mattel Inc | NYSE Composite vs. United Parks Resorts |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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