Correlation Between Ameriwest Lithium and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both Ameriwest Lithium 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 Ameriwest Lithium and Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameriwest Lithium and Lithium Americas Corp, you can compare the effects of market volatilities on Ameriwest Lithium 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 Ameriwest Lithium with a short position of Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriwest Lithium and Lithium Americas.
Diversification Opportunities for Ameriwest Lithium and Lithium Americas
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ameriwest and Lithium is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ameriwest Lithium 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 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 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 Ameriwest Lithium i.e., Ameriwest Lithium and Lithium Americas go up and down completely randomly.
Pair Corralation between Ameriwest Lithium and Lithium Americas
Assuming the 90 days horizon Ameriwest Lithium is expected to under-perform the Lithium Americas. In addition to that, Ameriwest Lithium is 1.57 times more volatile than Lithium Americas Corp. It trades about -0.14 of its total potential returns per unit of risk. Lithium Americas Corp is currently generating about -0.03 per unit of volatility. If you would invest 411.00 in Lithium Americas Corp on August 31, 2024 and sell it today you would lose (16.00) from holding Lithium Americas Corp or give up 3.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameriwest Lithium vs. Lithium Americas Corp
Performance |
| Timeline |
| Ameriwest Lithium |
| Lithium Americas Corp |
Ameriwest Lithium and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameriwest Lithium and Lithium Americas
The main advantage of trading using opposite Ameriwest Lithium and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriwest Lithium 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.| Ameriwest Lithium vs. Starr Peak Exploration | Ameriwest Lithium vs. American Lithium Corp | Ameriwest Lithium vs. Global Helium Corp | Ameriwest Lithium vs. Alpha Lithium |
| Lithium Americas vs. Piedmont Lithium Ltd | Lithium Americas vs. Standard Lithium | Lithium Americas vs. Vale SA ADR | Lithium Americas vs. BHP Group Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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