Correlation Between Arizona Lithium and American Lithium
Can any of the company-specific risk be diversified away by investing in both Arizona Lithium and American 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 Arizona Lithium and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arizona Lithium Limited and American Lithium Corp, you can compare the effects of market volatilities on Arizona Lithium and American 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 Arizona Lithium with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Lithium and American Lithium.
Diversification Opportunities for Arizona Lithium and American Lithium
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Arizona and American is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Lithium Limited and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp and Arizona 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 Arizona Lithium Limited are associated (or correlated) with American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Arizona Lithium i.e., Arizona Lithium and American Lithium go up and down completely randomly.
Pair Corralation between Arizona Lithium and American Lithium
If you would invest 1.30 in Arizona Lithium Limited on August 29, 2024 and sell it today you would earn a total of 0.03 from holding Arizona Lithium Limited or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Arizona Lithium Limited vs. American Lithium Corp
Performance |
| Timeline |
| Arizona Lithium |
| American Lithium Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Arizona Lithium and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arizona Lithium and American Lithium
The main advantage of trading using opposite Arizona Lithium and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arizona Lithium position performs unexpectedly, American 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 American Lithium will offset losses from the drop in American Lithium's long position.| Arizona Lithium vs. Bushveld Minerals Limited | Arizona Lithium vs. Aurelia Metals Limited | Arizona Lithium vs. Artemis Resources | Arizona Lithium vs. Ascendant Resources |
| American Lithium vs. American Lithium Corp | American Lithium vs. Frontier Lithium | American Lithium vs. Cypress Development Corp | American Lithium vs. Rock Tech Lithium |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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