Correlation Between Ioneer and Standard Lithium
Can any of the company-specific risk be diversified away by investing in both Ioneer and Standard 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 Ioneer and Standard Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ioneer Ltd American and Standard Lithium, you can compare the effects of market volatilities on Ioneer and Standard 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 Ioneer with a short position of Standard Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ioneer and Standard Lithium.
Diversification Opportunities for Ioneer and Standard Lithium
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ioneer and Standard is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ioneer Ltd American and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium and Ioneer 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 ioneer Ltd American are associated (or correlated) with Standard Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Lithium has no effect on the direction of Ioneer i.e., Ioneer and Standard Lithium go up and down completely randomly.
Pair Corralation between Ioneer and Standard Lithium
Given the investment horizon of 90 days ioneer Ltd American is expected to under-perform the Standard Lithium. But the stock apears to be less risky and, when comparing its historical volatility, ioneer Ltd American is 1.02 times less risky than Standard Lithium. The stock trades about -0.01 of its potential returns per unit of risk. The Standard Lithium is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 180.00 in Standard Lithium on May 27, 2025 and sell it today you would earn a total of 104.00 from holding Standard Lithium or generate 57.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.88% |
| Values | Daily Returns |
ioneer Ltd American vs. Standard Lithium
Performance |
| Timeline |
| ioneer American |
| Standard Lithium |
Ioneer and Standard Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ioneer and Standard Lithium
The main advantage of trading using opposite Ioneer and Standard Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ioneer position performs unexpectedly, Standard 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 Standard Lithium will offset losses from the drop in Standard Lithium's long position.The idea behind ioneer Ltd American and Standard Lithium 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.| Standard Lithium vs. Lithium Americas Corp | Standard Lithium vs. Piedmont Lithium Ltd | Standard Lithium vs. NioCorp Developments Ltd | Standard Lithium vs. Teck Resources Ltd |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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