Correlation Between Centerra Gold and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both Centerra Gold 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 Centerra Gold and Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centerra Gold and Lithium Americas Corp, you can compare the effects of market volatilities on Centerra Gold 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 Centerra Gold with a short position of Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centerra Gold and Lithium Americas.
Diversification Opportunities for Centerra Gold and Lithium Americas
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Centerra and Lithium is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold 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 Centerra Gold 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 Centerra Gold 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 Centerra Gold i.e., Centerra Gold and Lithium Americas go up and down completely randomly.
Pair Corralation between Centerra Gold and Lithium Americas
Assuming the 90 days horizon Centerra Gold is expected to generate 0.47 times more return on investment than Lithium Americas. However, Centerra Gold is 2.11 times less risky than Lithium Americas. It trades about 0.02 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about -0.02 per unit of risk. If you would invest 781.00 in Centerra Gold on September 1, 2024 and sell it today you would earn a total of 64.00 from holding Centerra Gold or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centerra Gold vs. Lithium Americas Corp
Performance |
| Timeline |
| Centerra Gold |
| Lithium Americas Corp |
Centerra Gold and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centerra Gold and Lithium Americas
The main advantage of trading using opposite Centerra Gold and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centerra Gold 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.| Centerra Gold vs. Alamos Gold | Centerra Gold vs. NovaGold Resources | Centerra Gold vs. Eldorado Gold Corp | Centerra Gold vs. IAMGold |
| Lithium Americas vs. American Lithium Corp | Lithium Americas vs. Ballard Power Systems | Lithium Americas vs. Lightspeed Commerce | Lithium Americas vs. WELL Health Technologies |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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