Correlation Between Aptiv PLC and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and Lithium Americas 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 Aptiv PLC and Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Lithium Americas Corp, you can compare the effects of market volatilities on Aptiv PLC and Lithium Americas 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 Aptiv PLC with a short position of Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Lithium Americas.
Diversification Opportunities for Aptiv PLC and Lithium Americas
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aptiv and Lithium is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Lithium Americas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Americas Corp and Aptiv PLC 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 Aptiv PLC are associated (or correlated) with Lithium Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Americas Corp has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Lithium Americas go up and down completely randomly.
Pair Corralation between Aptiv PLC and Lithium Americas
Given the investment horizon of 90 days Aptiv PLC is expected to under-perform the Lithium Americas. But the stock apears to be less risky and, when comparing its historical volatility, Aptiv PLC is 2.18 times less risky than Lithium Americas. The stock trades about -0.03 of its potential returns per unit of risk. The Lithium Americas Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 407.00 in Lithium Americas Corp on November 3, 2024 and sell it today you would lose (107.00) from holding Lithium Americas Corp or give up 26.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. Lithium Americas Corp
Performance |
| Timeline |
| Aptiv PLC |
| Lithium Americas Corp |
Aptiv PLC and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Lithium Americas
The main advantage of trading using opposite Aptiv PLC and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, Lithium Americas 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 Americas will offset losses from the drop in Lithium Americas' long position.| Aptiv PLC vs. Allison Transmission Holdings | Aptiv PLC vs. LKQ Corporation | Aptiv PLC vs. Lear Corporation | Aptiv PLC vs. Magna International |
| Lithium Americas vs. Sigma Lithium Resources | Lithium Americas vs. Standard Lithium | Lithium Americas vs. Sayona Mining Limited | Lithium Americas vs. MP Materials 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |