Correlation Between NYSE Composite and Imagine Lithium
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Imagine 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 NYSE Composite and Imagine Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Imagine Lithium, you can compare the effects of market volatilities on NYSE Composite and Imagine 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 NYSE Composite with a short position of Imagine Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Imagine Lithium.
Diversification Opportunities for NYSE Composite and Imagine Lithium
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Imagine is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Imagine Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imagine Lithium and NYSE Composite 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 NYSE Composite are associated (or correlated) with Imagine Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imagine Lithium has no effect on the direction of NYSE Composite i.e., NYSE Composite and Imagine Lithium go up and down completely randomly.
Pair Corralation between NYSE Composite and Imagine Lithium
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Imagine Lithium. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 20.34 times less risky than Imagine Lithium. The index trades about -0.31 of its potential returns per unit of risk. The Imagine Lithium is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Imagine Lithium on January 20, 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 | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
NYSE Composite vs. Imagine Lithium
Performance |
Timeline |
NYSE Composite and Imagine Lithium Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Imagine Lithium
Pair trading matchups for Imagine Lithium
Pair Trading with NYSE Composite and Imagine Lithium
The main advantage of trading using opposite NYSE Composite and Imagine Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Imagine 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 Imagine Lithium will offset losses from the drop in Imagine Lithium's long position.NYSE Composite vs. Dine Brands Global | NYSE Composite vs. BJs Restaurants | NYSE Composite vs. Chipotle Mexican Grill | NYSE Composite vs. Shake Shack |
Imagine Lithium vs. Manulife Financial Corp | Imagine Lithium vs. Toronto Dominion Bank | Imagine Lithium vs. Enbridge | Imagine Lithium vs. Telus Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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