Correlation Between EMX Royalty and American Lithium
Can any of the company-specific risk be diversified away by investing in both EMX Royalty 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 EMX Royalty and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMX Royalty Corp and American Lithium Corp, you can compare the effects of market volatilities on EMX Royalty 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 EMX Royalty with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMX Royalty and American Lithium.
Diversification Opportunities for EMX Royalty and American Lithium
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EMX and American is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp 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 EMX Royalty 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 EMX Royalty Corp 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 EMX Royalty i.e., EMX Royalty and American Lithium go up and down completely randomly.
Pair Corralation between EMX Royalty and American Lithium
Considering the 90-day investment horizon EMX Royalty Corp is expected to generate 0.46 times more return on investment than American Lithium. However, EMX Royalty Corp is 2.19 times less risky than American Lithium. It trades about -0.15 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.11 per unit of risk. If you would invest 186.00 in EMX Royalty Corp on August 31, 2024 and sell it today you would lose (12.00) from holding EMX Royalty Corp or give up 6.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMX Royalty Corp vs. American Lithium Corp
Performance |
| Timeline |
| EMX Royalty Corp |
| American Lithium Corp |
EMX Royalty and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMX Royalty and American Lithium
The main advantage of trading using opposite EMX Royalty and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMX Royalty 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.| EMX Royalty vs. Metalla Royalty Streaming | EMX Royalty vs. Osisko Gold Ro | EMX Royalty vs. Equinox Gold Corp | EMX Royalty vs. SilverCrest Metals |
| American Lithium vs. Olympic Steel | American Lithium vs. Kaiser Aluminum | American Lithium vs. Diageo PLC ADR | American Lithium vs. Century Aluminum |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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