Correlation Between American Lithium and Class 1
Can any of the company-specific risk be diversified away by investing in both American Lithium and Class 1 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 American Lithium and Class 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Lithium Corp and Class 1 Nickel, you can compare the effects of market volatilities on American Lithium and Class 1 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 American Lithium with a short position of Class 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Class 1.
Diversification Opportunities for American Lithium and Class 1
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Class is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Class 1 Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Class 1 Nickel and American 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 American Lithium Corp are associated (or correlated) with Class 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Class 1 Nickel has no effect on the direction of American Lithium i.e., American Lithium and Class 1 go up and down completely randomly.
Pair Corralation between American Lithium and Class 1
Given the investment horizon of 90 days American Lithium Corp is expected to generate 0.45 times more return on investment than Class 1. However, American Lithium Corp is 2.23 times less risky than Class 1. It trades about -0.04 of its potential returns per unit of risk. Class 1 Nickel is currently generating about -0.02 per unit of risk. If you would invest 66.00 in American Lithium Corp on September 12, 2024 and sell it today you would lose (3.00) from holding American Lithium Corp or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Lithium Corp vs. Class 1 Nickel
Performance |
| Timeline |
| American Lithium Corp |
| Class 1 Nickel |
American Lithium and Class 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and Class 1
The main advantage of trading using opposite American Lithium and Class 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, Class 1 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 Class 1 will offset losses from the drop in Class 1's long position.| American Lithium vs. AKITA Drilling | American Lithium vs. KeyCorp | American Lithium vs. Mill City Ventures | American Lithium vs. Red Branch Technologies |
| Class 1 vs. Green Battery Minerals | Class 1 vs. Pampa Metals | Class 1 vs. EcoGraf Limited | Class 1 vs. Mundoro Capital |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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