Correlation Between First American and Lithium Corp
Can any of the company-specific risk be diversified away by investing in both First American and Lithium Corp 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 First American and Lithium Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First American Silver and Lithium Corp, you can compare the effects of market volatilities on First American and Lithium Corp 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 First American with a short position of Lithium Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and Lithium Corp.
Diversification Opportunities for First American and Lithium Corp
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Lithium is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First American Silver and Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Corp and First American 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 First American Silver are associated (or correlated) with Lithium Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Corp has no effect on the direction of First American i.e., First American and Lithium Corp go up and down completely randomly.
Pair Corralation between First American and Lithium Corp
If you would invest 3.20 in Lithium Corp on September 3, 2024 and sell it today you would earn a total of 0.10 from holding Lithium Corp or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
First American Silver vs. Lithium Corp
Performance |
| Timeline |
| First American Silver |
| Lithium Corp |
First American and Lithium Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First American and Lithium Corp
The main advantage of trading using opposite First American and Lithium Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First American position performs unexpectedly, Lithium Corp 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 Corp will offset losses from the drop in Lithium Corp's long position.| First American vs. Australian Vanadium Limited | First American vs. International Lithium Corp | First American vs. Wealth Minerals | First American vs. Decade Resources |
| Lithium Corp vs. Qubec Nickel Corp | Lithium Corp vs. IGO Limited | Lithium Corp vs. Avarone Metals | Lithium Corp vs. Adriatic Metals PLC |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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