Correlation Between Amarc Resources and Lithium Ionic
Can any of the company-specific risk be diversified away by investing in both Amarc Resources and Lithium Ionic 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 Amarc Resources and Lithium Ionic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amarc Resources and Lithium Ionic Corp, you can compare the effects of market volatilities on Amarc Resources and Lithium Ionic 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 Amarc Resources with a short position of Lithium Ionic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amarc Resources and Lithium Ionic.
Diversification Opportunities for Amarc Resources and Lithium Ionic
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Amarc and Lithium is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Amarc Resources and Lithium Ionic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Ionic Corp and Amarc Resources 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 Amarc Resources are associated (or correlated) with Lithium Ionic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Ionic Corp has no effect on the direction of Amarc Resources i.e., Amarc Resources and Lithium Ionic go up and down completely randomly.
Pair Corralation between Amarc Resources and Lithium Ionic
Assuming the 90 days horizon Amarc Resources is expected to generate 10.61 times less return on investment than Lithium Ionic. But when comparing it to its historical volatility, Amarc Resources is 1.32 times less risky than Lithium Ionic. It trades about 0.03 of its potential returns per unit of risk. Lithium Ionic Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 52.00 in Lithium Ionic Corp on August 29, 2024 and sell it today you would earn a total of 15.00 from holding Lithium Ionic Corp or generate 28.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amarc Resources vs. Lithium Ionic Corp
Performance |
| Timeline |
| Amarc Resources |
| Lithium Ionic Corp |
Amarc Resources and Lithium Ionic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amarc Resources and Lithium Ionic
The main advantage of trading using opposite Amarc Resources and Lithium Ionic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amarc Resources position performs unexpectedly, Lithium Ionic 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 Ionic will offset losses from the drop in Lithium Ionic's long position.The idea behind Amarc Resources and Lithium Ionic Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lithium Ionic vs. IGO Limited | Lithium Ionic vs. Grid Metals Corp | Lithium Ionic vs. First American Silver | Lithium Ionic vs. Qubec Nickel 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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