Correlation Between Ameriwest Lithium and International Lithium
Can any of the company-specific risk be diversified away by investing in both Ameriwest Lithium and International Lithium 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 International Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriwest Lithium and International Lithium Corp, you can compare the effects of market volatilities on Ameriwest Lithium and International Lithium 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 International Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriwest Lithium and International Lithium.
Diversification Opportunities for Ameriwest Lithium and International Lithium
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ameriwest and International is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ameriwest Lithium and International Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Lithium 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 International Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Lithium has no effect on the direction of Ameriwest Lithium i.e., Ameriwest Lithium and International Lithium go up and down completely randomly.
Pair Corralation between Ameriwest Lithium and International Lithium
Assuming the 90 days horizon Ameriwest Lithium is expected to under-perform the International Lithium. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ameriwest Lithium is 2.28 times less risky than International Lithium. The pink sheet trades about -0.05 of its potential returns per unit of risk. The International Lithium Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.29 in International Lithium Corp on September 1, 2024 and sell it today you would earn a total of 0.06 from holding International Lithium Corp or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameriwest Lithium vs. International Lithium Corp
Performance |
| Timeline |
| Ameriwest Lithium |
| International Lithium |
Ameriwest Lithium and International Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriwest Lithium and International Lithium
The main advantage of trading using opposite Ameriwest Lithium and International Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriwest Lithium position performs unexpectedly, International Lithium 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 International Lithium will offset losses from the drop in International Lithium'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 |
| International Lithium vs. Decade Resources | International Lithium vs. Silver Spruce Resources | International Lithium vs. Grid Metals Corp | International Lithium vs. Canada Rare Earth |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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