Correlation Between American Lithium and Starr Peak
Can any of the company-specific risk be diversified away by investing in both American Lithium and Starr Peak 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 Starr Peak 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 Starr Peak Exploration, you can compare the effects of market volatilities on American Lithium and Starr Peak 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 Starr Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Starr Peak.
Diversification Opportunities for American Lithium and Starr Peak
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Starr is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Starr Peak Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starr Peak Exploration 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 Starr Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starr Peak Exploration has no effect on the direction of American Lithium i.e., American Lithium and Starr Peak go up and down completely randomly.
Pair Corralation between American Lithium and Starr Peak
Given the investment horizon of 90 days American Lithium Corp is expected to under-perform the Starr Peak. But the stock apears to be less risky and, when comparing its historical volatility, American Lithium Corp is 1.86 times less risky than Starr Peak. The stock trades about -0.22 of its potential returns per unit of risk. The Starr Peak Exploration is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Starr Peak Exploration on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Starr Peak Exploration 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 |
American Lithium Corp vs. Starr Peak Exploration
Performance |
| Timeline |
| American Lithium Corp |
| Starr Peak Exploration |
American Lithium and Starr Peak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and Starr Peak
The main advantage of trading using opposite American Lithium and Starr Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, Starr Peak 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 Starr Peak will offset losses from the drop in Starr Peak's long position.| American Lithium vs. Lifevantage | American Lithium vs. Albertsons Companies | American Lithium vs. BBB Foods | American Lithium vs. Natural Alternatives International |
| Starr Peak vs. Ameriwest Lithium | Starr Peak vs. American Lithium Corp | Starr Peak vs. Global Helium Corp | Starr Peak vs. ZincX Resources 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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