Correlation Between Ameriwest Lithium and European Metals
Can any of the company-specific risk be diversified away by investing in both Ameriwest Lithium and European Metals 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 Ameriwest Lithium and European Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriwest Lithium and European Metals Holdings, you can compare the effects of market volatilities on Ameriwest Lithium and European Metals 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 Ameriwest Lithium with a short position of European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriwest Lithium and European Metals.
Diversification Opportunities for Ameriwest Lithium and European Metals
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ameriwest and European is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ameriwest Lithium and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings and Ameriwest 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 Ameriwest Lithium are associated (or correlated) with European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Ameriwest Lithium i.e., Ameriwest Lithium and European Metals go up and down completely randomly.
Pair Corralation between Ameriwest Lithium and European Metals
Assuming the 90 days horizon Ameriwest Lithium is expected to generate 25.49 times less return on investment than European Metals. But when comparing it to its historical volatility, Ameriwest Lithium is 1.06 times less risky than European Metals. It trades about 0.0 of its potential returns per unit of risk. European Metals Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11.00 in European Metals Holdings on August 29, 2024 and sell it today you would earn a total of 1.00 from holding European Metals Holdings or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Ameriwest Lithium vs. European Metals Holdings
Performance |
| Timeline |
| Ameriwest Lithium |
| European Metals Holdings |
Ameriwest Lithium and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriwest Lithium and European Metals
The main advantage of trading using opposite Ameriwest Lithium and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriwest Lithium position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Ameriwest Lithium vs. Starr Peak Exploration | Ameriwest Lithium vs. American Lithium Corp | Ameriwest Lithium vs. Global Helium Corp | Ameriwest Lithium vs. Alpha Lithium |
| European Metals vs. Aurelia Metals Limited | European Metals vs. Centaurus Metals Limited | European Metals vs. Artemis Resources | European Metals vs. Ascendant Resources |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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