Correlation Between Defense Metals and Lithium Chile
Can any of the company-specific risk be diversified away by investing in both Defense Metals and Lithium Chile 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 Defense Metals and Lithium Chile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defense Metals Corp and Lithium Chile, you can compare the effects of market volatilities on Defense Metals and Lithium Chile 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 Defense Metals with a short position of Lithium Chile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defense Metals and Lithium Chile.
Diversification Opportunities for Defense Metals and Lithium Chile
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Defense and Lithium is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Defense Metals Corp and Lithium Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Chile and Defense Metals 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 Defense Metals Corp are associated (or correlated) with Lithium Chile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Chile has no effect on the direction of Defense Metals i.e., Defense Metals and Lithium Chile go up and down completely randomly.
Pair Corralation between Defense Metals and Lithium Chile
Assuming the 90 days horizon Defense Metals Corp is expected to generate 2.55 times more return on investment than Lithium Chile. However, Defense Metals is 2.55 times more volatile than Lithium Chile. It trades about 0.05 of its potential returns per unit of risk. Lithium Chile is currently generating about -0.09 per unit of risk. If you would invest 16.00 in Defense Metals Corp on August 21, 2025 and sell it today you would earn a total of 0.00 from holding Defense Metals Corp 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 |
Defense Metals Corp vs. Lithium Chile
Performance |
| Timeline |
| Defense Metals Corp |
| Lithium Chile |
Defense Metals and Lithium Chile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Defense Metals and Lithium Chile
The main advantage of trading using opposite Defense Metals and Lithium Chile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defense Metals position performs unexpectedly, Lithium Chile 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 Chile will offset losses from the drop in Lithium Chile's long position.| Defense Metals vs. C3 Metals | Defense Metals vs. Panoro Minerals | Defense Metals vs. SRG Mining | Defense Metals vs. Texas Rare Earth |
| Lithium Chile vs. Lithium Ionic Corp | Lithium Chile vs. Panoro Minerals | Lithium Chile vs. Defense Metals Corp | Lithium Chile vs. SRG Mining |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |