Correlation Between E3 Lithium and Critical Elements
Can any of the company-specific risk be diversified away by investing in both E3 Lithium and Critical Elements 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 E3 Lithium and Critical Elements into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E3 Lithium and Critical Elements, you can compare the effects of market volatilities on E3 Lithium and Critical Elements 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 E3 Lithium with a short position of Critical Elements. Check out your portfolio center. Please also check ongoing floating volatility patterns of E3 Lithium and Critical Elements.
Diversification Opportunities for E3 Lithium and Critical Elements
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETL and Critical is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding E3 Lithium and Critical Elements in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Elements and E3 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 E3 Lithium are associated (or correlated) with Critical Elements. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Elements has no effect on the direction of E3 Lithium i.e., E3 Lithium and Critical Elements go up and down completely randomly.
Pair Corralation between E3 Lithium and Critical Elements
Assuming the 90 days horizon E3 Lithium is expected to generate 1.04 times more return on investment than Critical Elements. However, E3 Lithium is 1.04 times more volatile than Critical Elements. It trades about -0.05 of its potential returns per unit of risk. Critical Elements is currently generating about -0.08 per unit of risk. If you would invest 118.00 in E3 Lithium on October 10, 2025 and sell it today you would lose (17.00) from holding E3 Lithium or give up 14.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E3 Lithium vs. Critical Elements
Performance |
| Timeline |
| E3 Lithium |
| Critical Elements |
E3 Lithium and Critical Elements Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E3 Lithium and Critical Elements
The main advantage of trading using opposite E3 Lithium and Critical Elements positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E3 Lithium position performs unexpectedly, Critical Elements 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 Critical Elements will offset losses from the drop in Critical Elements' long position.| E3 Lithium vs. Surge Battery Metals | E3 Lithium vs. Solitario Exploration Royalty | E3 Lithium vs. Cordoba Minerals Corp | E3 Lithium vs. GR Silver Mining |
| Critical Elements vs. Stillwater Critical Minerals | Critical Elements vs. Rock Tech Lithium | Critical Elements vs. C3 Metals | Critical Elements vs. Wallbridge 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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