Correlation Between DISTRICT METALS and American Lithium
Can any of the company-specific risk be diversified away by investing in both DISTRICT METALS 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 DISTRICT METALS and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DISTRICT METALS and American Lithium Corp, you can compare the effects of market volatilities on DISTRICT METALS 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 DISTRICT METALS with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of DISTRICT METALS and American Lithium.
Diversification Opportunities for DISTRICT METALS and American Lithium
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DISTRICT and American is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding DISTRICT METALS 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 DISTRICT METALS 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 DISTRICT METALS 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 DISTRICT METALS i.e., DISTRICT METALS and American Lithium go up and down completely randomly.
Pair Corralation between DISTRICT METALS and American Lithium
Assuming the 90 days trading horizon DISTRICT METALS is expected to generate 0.88 times more return on investment than American Lithium. However, DISTRICT METALS is 1.14 times less risky than American Lithium. It trades about 0.09 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.02 per unit of risk. If you would invest 9.95 in DISTRICT METALS on September 14, 2024 and sell it today you would earn a total of 14.05 from holding DISTRICT METALS or generate 141.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DISTRICT METALS vs. American Lithium Corp
Performance |
| Timeline |
| DISTRICT METALS |
| American Lithium Corp |
DISTRICT METALS and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DISTRICT METALS and American Lithium
The main advantage of trading using opposite DISTRICT METALS and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DISTRICT METALS 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.| DISTRICT METALS vs. American Lithium Corp | DISTRICT METALS vs. ADRIATIC METALS LS 013355 | DISTRICT METALS vs. Superior Plus Corp | DISTRICT METALS vs. SIVERS SEMICONDUCTORS AB |
| American Lithium vs. Standard Lithium | American Lithium vs. BYD Company Limited | 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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