Correlation Between Ameriwest Lithium and Global Energy
Can any of the company-specific risk be diversified away by investing in both Ameriwest Lithium and Global Energy 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 Global Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriwest Lithium and Global Energy Metals, you can compare the effects of market volatilities on Ameriwest Lithium and Global Energy 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 Global Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriwest Lithium and Global Energy.
Diversification Opportunities for Ameriwest Lithium and Global Energy
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ameriwest and Global is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ameriwest Lithium and Global Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Energy Metals 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 Global Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Energy Metals has no effect on the direction of Ameriwest Lithium i.e., Ameriwest Lithium and Global Energy go up and down completely randomly.
Pair Corralation between Ameriwest Lithium and Global Energy
Assuming the 90 days horizon Ameriwest Lithium is expected to under-perform the Global Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ameriwest Lithium is 2.27 times less risky than Global Energy. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Global Energy Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.28 in Global Energy Metals on September 1, 2024 and sell it today you would lose (0.05) from holding Global Energy Metals or give up 3.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ameriwest Lithium vs. Global Energy Metals
Performance |
| Timeline |
| Ameriwest Lithium |
| Global Energy Metals |
Ameriwest Lithium and Global Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriwest Lithium and Global Energy
The main advantage of trading using opposite Ameriwest Lithium and Global Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriwest Lithium position performs unexpectedly, Global Energy 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 Global Energy will offset losses from the drop in Global Energy's 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 |
| Global Energy vs. ATT Inc | Global Energy vs. Merck Company | Global Energy vs. Walt Disney | Global Energy vs. Caterpillar |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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